Correlation Between Transamerica Financial and Mfs Utilities
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Mfs Utilities 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 Transamerica Financial and Mfs Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Financial Life and Mfs Utilities Fund, you can compare the effects of market volatilities on Transamerica Financial and Mfs Utilities 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 Transamerica Financial with a short position of Mfs Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Mfs Utilities.
Diversification Opportunities for Transamerica Financial and Mfs Utilities
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Transamerica and Mfs is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities and Transamerica Financial 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 Transamerica Financial Life are associated (or correlated) with Mfs Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Mfs Utilities go up and down completely randomly.
Pair Corralation between Transamerica Financial and Mfs Utilities
Assuming the 90 days horizon Transamerica Financial is expected to generate 1.14 times less return on investment than Mfs Utilities. But when comparing it to its historical volatility, Transamerica Financial Life is 1.31 times less risky than Mfs Utilities. It trades about 0.13 of its potential returns per unit of risk. Mfs Utilities Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,332 in Mfs Utilities Fund on September 3, 2024 and sell it today you would earn a total of 149.00 from holding Mfs Utilities Fund or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Financial Life vs. Mfs Utilities Fund
Performance |
| Timeline |
| Transamerica Financial |
| Mfs Utilities |
Transamerica Financial and Mfs Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and Mfs Utilities
The main advantage of trading using opposite Transamerica Financial and Mfs Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Mfs Utilities 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 Utilities will offset losses from the drop in Mfs Utilities' long position.| Transamerica Financial vs. Aig Government Money | Transamerica Financial vs. John Hancock Money | Transamerica Financial vs. First American Funds | Transamerica Financial vs. Matson Money Equity |
| Mfs Utilities vs. Transamerica Financial Life | Mfs Utilities vs. Mesirow Financial Small | Mfs Utilities vs. Royce Global Financial | Mfs Utilities vs. Icon Financial 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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