Correlation Between GM and Mfs Prudent
Can any of the company-specific risk be diversified away by investing in both GM and Mfs Prudent at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GM and Mfs Prudent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Mfs Prudent Investor, you can compare the effects of market volatilities on GM and Mfs Prudent and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GM with a short position of Mfs Prudent. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Mfs Prudent.
Diversification Opportunities for GM and Mfs Prudent
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Mfs is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mfs Prudent Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Prudent Investor and GM is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on General Motors are associated (or correlated) with Mfs Prudent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Prudent Investor has no effect on the direction of GM i.e., GM and Mfs Prudent go up and down completely randomly.
Pair Corralation between GM and Mfs Prudent
Allowing for the 90-day total investment horizon General Motors is expected to generate 5.03 times more return on investment than Mfs Prudent. However, GM is 5.03 times more volatile than Mfs Prudent Investor. It trades about 0.03 of its potential returns per unit of risk. Mfs Prudent Investor is currently generating about 0.11 per unit of risk. If you would invest 3,902 in General Motors on November 27, 2024 and sell it today you would earn a total of 755.00 from holding General Motors or generate 19.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Mfs Prudent Investor
Performance |
| Timeline |
| General Motors |
| Mfs Prudent Investor |
GM and Mfs Prudent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Mfs Prudent
The main advantage of trading using opposite GM and Mfs Prudent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Mfs Prudent can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mfs Prudent will offset losses from the drop in Mfs Prudent's long position.The idea behind General Motors and Mfs Prudent Investor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Mfs Prudent vs. Virtus High Yield | Mfs Prudent vs. Voya High Yield | Mfs Prudent vs. Neuberger Berman Income | Mfs Prudent vs. Gmo High Yield |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |