Correlation Between Mfs Lifetime and Mfs Growth
Can any of the company-specific risk be diversified away by investing in both Mfs Lifetime 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 Lifetime 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 Lifetime 2065 and Mfs Growth Fund, you can compare the effects of market volatilities on Mfs Lifetime 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 Lifetime with a short position of Mfs Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Lifetime and Mfs Growth.
Diversification Opportunities for Mfs Lifetime and Mfs Growth
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and Mfs is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Lifetime 2065 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 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 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 Lifetime i.e., Mfs Lifetime and Mfs Growth go up and down completely randomly.
Pair Corralation between Mfs Lifetime and Mfs Growth
Assuming the 90 days horizon Mfs Lifetime is expected to generate 1.89 times less return on investment than Mfs Growth. But when comparing it to its historical volatility, Mfs Lifetime 2065 is 1.67 times less risky than Mfs Growth. It trades about 0.1 of its potential returns per unit of risk. Mfs Growth Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 17,320 in Mfs Growth Fund on August 25, 2024 and sell it today you would earn a total of 5,412 from holding Mfs Growth Fund or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Lifetime 2065 vs. Mfs Growth Fund
Performance |
| Timeline |
| Mfs Lifetime 2065 |
| Mfs Growth Fund |
Mfs Lifetime and Mfs Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Lifetime and Mfs Growth
The main advantage of trading using opposite Mfs Lifetime and Mfs Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Lifetime 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 Lifetime vs. Mfs Prudent Investor | Mfs Lifetime vs. Mfs Prudent Investor | Mfs Lifetime vs. Mfs Prudent Investor | Mfs Lifetime vs. Mfs Prudent Investor |
| Mfs Growth vs. Mfs Value Fund | Mfs Growth vs. Mfs International Value | Mfs Growth vs. Mfs International Diversification | Mfs Growth vs. John Hancock Disciplined |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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