Correlation Between Mfs High and Mfs Growth
Can any of the company-specific risk be diversified away by investing in both Mfs High and Mfs Growth 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 Mfs High and Mfs Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs High Yield and Mfs Growth Fund, you can compare the effects of market volatilities on Mfs High and Mfs Growth 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 Mfs High with a short position of Mfs Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs High and Mfs Growth.
Diversification Opportunities for Mfs High and Mfs Growth
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and Mfs is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mfs High Yield and Mfs Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Growth Fund and Mfs High 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 Mfs High Yield are associated (or correlated) with Mfs Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Growth Fund has no effect on the direction of Mfs High i.e., Mfs High and Mfs Growth go up and down completely randomly.
Pair Corralation between Mfs High and Mfs Growth
Assuming the 90 days horizon Mfs High Yield is expected to under-perform the Mfs Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mfs High Yield is 6.08 times less risky than Mfs Growth. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Mfs Growth Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 19,788 in Mfs Growth Fund on August 29, 2024 and sell it today you would earn a total of 1,052 from holding Mfs Growth Fund or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.35% |
| Values | Daily Returns |
Mfs High Yield vs. Mfs Growth Fund
Performance |
| Timeline |
| Mfs High Yield |
| Mfs Growth Fund |
Mfs High and Mfs Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs High and Mfs Growth
The main advantage of trading using opposite Mfs High and Mfs Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs High position performs unexpectedly, Mfs Growth 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 Growth will offset losses from the drop in Mfs Growth's long position.| Mfs High vs. Champlain Small | Mfs High vs. Artisan Small Cap | Mfs High vs. Chartwell Small Cap | Mfs High vs. Gmo Small Cap |
| Mfs Growth vs. Massachusetts Investors Trust | Mfs Growth vs. Mfs Research Fund | Mfs Growth vs. Massachusetts Investors Growth | Mfs Growth vs. Mfs Value 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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