Correlation Between Lifex Income and MFS Investment
Can any of the company-specific risk be diversified away by investing in both Lifex Income and MFS Investment 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 Lifex Income and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifex Income and MFS Investment Grade, you can compare the effects of market volatilities on Lifex Income and MFS Investment 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 Lifex Income with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifex Income and MFS Investment.
Diversification Opportunities for Lifex Income and MFS Investment
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lifex and MFS is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lifex Income and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade and Lifex Income 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 Lifex Income are associated (or correlated) with MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of Lifex Income i.e., Lifex Income and MFS Investment go up and down completely randomly.
Pair Corralation between Lifex Income and MFS Investment
Assuming the 90 days horizon Lifex Income is expected to generate 1.48 times less return on investment than MFS Investment. But when comparing it to its historical volatility, Lifex Income is 1.01 times less risky than MFS Investment. It trades about 0.14 of its potential returns per unit of risk. MFS Investment Grade is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 735.00 in MFS Investment Grade on September 1, 2024 and sell it today you would earn a total of 89.00 from holding MFS Investment Grade or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Lifex Income vs. MFS Investment Grade
Performance |
| Timeline |
| Lifex Income |
| MFS Investment Grade |
Lifex Income and MFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifex Income and MFS Investment
The main advantage of trading using opposite Lifex Income and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifex Income position performs unexpectedly, MFS Investment 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 Investment will offset losses from the drop in MFS Investment's long position.| Lifex Income vs. Virtus Convertible | Lifex Income vs. Putnam Convertible Incm Gwth | Lifex Income vs. Columbia Vertible Securities | Lifex Income vs. Fidelity Sai Convertible |
| MFS Investment vs. Visa Class A | MFS Investment vs. Diamond Hill Investment | MFS Investment vs. Distoken Acquisition | MFS Investment vs. Associated Capital Group |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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