Correlation Between GM and Mfs Intrinsic
Can any of the company-specific risk be diversified away by investing in both GM and Mfs Intrinsic 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 Intrinsic 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 Intrinsic Value, you can compare the effects of market volatilities on GM and Mfs Intrinsic 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 Intrinsic. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Mfs Intrinsic.
Diversification Opportunities for GM and Mfs Intrinsic
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Mfs is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mfs Intrinsic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Intrinsic Value 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 Intrinsic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Intrinsic Value has no effect on the direction of GM i.e., GM and Mfs Intrinsic go up and down completely randomly.
Pair Corralation between GM and Mfs Intrinsic
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.58 times more return on investment than Mfs Intrinsic. However, GM is 3.58 times more volatile than Mfs Intrinsic Value. It trades about 0.09 of its potential returns per unit of risk. Mfs Intrinsic Value is currently generating about 0.23 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 277.00 from holding General Motors or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Mfs Intrinsic Value
Performance |
| Timeline |
| General Motors |
| Mfs Intrinsic Value |
GM and Mfs Intrinsic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Mfs Intrinsic
The main advantage of trading using opposite GM and Mfs Intrinsic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Mfs Intrinsic 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 Intrinsic will offset losses from the drop in Mfs Intrinsic's long position.The idea behind General Motors and Mfs Intrinsic Value 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 Intrinsic vs. California Bond Fund | Mfs Intrinsic vs. Mirova Global Green | Mfs Intrinsic vs. Angel Oak Ultrashort | Mfs Intrinsic vs. Astor Longshort Fund |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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