Correlation Between Lifestyle and Mfs Technology
Can any of the company-specific risk be diversified away by investing in both Lifestyle and Mfs Technology 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 Lifestyle and Mfs Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestyle Ii Moderate and Mfs Technology Fund, you can compare the effects of market volatilities on Lifestyle and Mfs Technology 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 Lifestyle with a short position of Mfs Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and Mfs Technology.
Diversification Opportunities for Lifestyle and Mfs Technology
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lifestyle and Mfs is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Moderate and Mfs Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Technology and Lifestyle 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 Lifestyle Ii Moderate are associated (or correlated) with Mfs Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Technology has no effect on the direction of Lifestyle i.e., Lifestyle and Mfs Technology go up and down completely randomly.
Pair Corralation between Lifestyle and Mfs Technology
Assuming the 90 days horizon Lifestyle is expected to generate 2.57 times less return on investment than Mfs Technology. But when comparing it to its historical volatility, Lifestyle Ii Moderate is 3.53 times less risky than Mfs Technology. It trades about 0.08 of its potential returns per unit of risk. Mfs Technology Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,510 in Mfs Technology Fund on August 24, 2024 and sell it today you would earn a total of 1,646 from holding Mfs Technology Fund or generate 46.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifestyle Ii Moderate vs. Mfs Technology Fund
Performance |
| Timeline |
| Lifestyle Ii Moderate |
| Mfs Technology |
Lifestyle and Mfs Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifestyle and Mfs Technology
The main advantage of trading using opposite Lifestyle and Mfs Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle position performs unexpectedly, Mfs Technology 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 Technology will offset losses from the drop in Mfs Technology's long position.| Lifestyle vs. The Hartford Balanced | Lifestyle vs. HUMANA INC | Lifestyle vs. Aquagold International | Lifestyle vs. Barloworld Ltd ADR |
| Mfs Technology vs. Pro Blend Moderate Term | Mfs Technology vs. Lifestyle Ii Moderate | Mfs Technology vs. Dimensional Retirement Income | Mfs Technology vs. Fidelity Managed Retirement |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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