Correlation Between Mfs Lifetime and Massachusetts Investors
Can any of the company-specific risk be diversified away by investing in both Mfs Lifetime and Massachusetts Investors 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 Massachusetts Investors 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 Massachusetts Investors Growth, you can compare the effects of market volatilities on Mfs Lifetime and Massachusetts Investors 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 Massachusetts Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Lifetime and Massachusetts Investors.
Diversification Opportunities for Mfs Lifetime and Massachusetts Investors
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mfs and Massachusetts is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Lifetime 2065 and Massachusetts Investors Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massachusetts Investors 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 Massachusetts Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massachusetts Investors has no effect on the direction of Mfs Lifetime i.e., Mfs Lifetime and Massachusetts Investors go up and down completely randomly.
Pair Corralation between Mfs Lifetime and Massachusetts Investors
Assuming the 90 days horizon Mfs Lifetime is expected to generate 1.12 times less return on investment than Massachusetts Investors. But when comparing it to its historical volatility, Mfs Lifetime 2065 is 1.08 times less risky than Massachusetts Investors. It trades about 0.34 of its potential returns per unit of risk. Massachusetts Investors Growth is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 4,700 in Massachusetts Investors Growth on September 1, 2024 and sell it today you would earn a total of 210.00 from holding Massachusetts Investors Growth or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Lifetime 2065 vs. Massachusetts Investors Growth
Performance |
| Timeline |
| Mfs Lifetime 2065 |
| Massachusetts Investors |
Mfs Lifetime and Massachusetts Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Lifetime and Massachusetts Investors
The main advantage of trading using opposite Mfs Lifetime and Massachusetts Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Lifetime position performs unexpectedly, Massachusetts Investors 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 Massachusetts Investors will offset losses from the drop in Massachusetts Investors' 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 |
| Massachusetts Investors vs. Mfs Prudent Investor | Massachusetts Investors vs. Mfs Prudent Investor | Massachusetts Investors vs. Mfs Prudent Investor | Massachusetts Investors vs. Mfs Prudent Investor |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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