Correlation Between Mfs Lifetime and Mfs New
Can any of the company-specific risk be diversified away by investing in both Mfs Lifetime and Mfs New 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 Lifetime and Mfs New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Lifetime 2065 and Mfs New Discovery, you can compare the effects of market volatilities on Mfs Lifetime and Mfs New 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 Lifetime with a short position of Mfs New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Lifetime and Mfs New.
Diversification Opportunities for Mfs Lifetime and Mfs New
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and Mfs is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Lifetime 2065 and Mfs New Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs New Discovery and Mfs Lifetime 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 Lifetime 2065 are associated (or correlated) with Mfs New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs New Discovery has no effect on the direction of Mfs Lifetime i.e., Mfs Lifetime and Mfs New go up and down completely randomly.
Pair Corralation between Mfs Lifetime and Mfs New
Assuming the 90 days horizon Mfs Lifetime is expected to generate 4.03 times less return on investment than Mfs New. But when comparing it to its historical volatility, Mfs Lifetime 2065 is 1.99 times less risky than Mfs New. It trades about 0.13 of its potential returns per unit of risk. Mfs New Discovery is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,489 in Mfs New Discovery on August 26, 2024 and sell it today you would earn a total of 179.00 from holding Mfs New Discovery or generate 7.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Lifetime 2065 vs. Mfs New Discovery
Performance |
| Timeline |
| Mfs Lifetime 2065 |
| Mfs New Discovery |
Mfs Lifetime and Mfs New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Lifetime and Mfs New
The main advantage of trading using opposite Mfs Lifetime and Mfs New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Lifetime position performs unexpectedly, Mfs New 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 New will offset losses from the drop in Mfs New's long position.| Mfs Lifetime vs. The Hartford Equity | Mfs Lifetime vs. Gmo Equity Allocation | Mfs Lifetime vs. Ultra Short Term Fixed | Mfs Lifetime vs. The Hartford Equity |
| Mfs New vs. Mfs Mid Cap | Mfs New vs. Massachusetts Investors Growth | Mfs New vs. Mfs Growth Fund | Mfs New 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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