Correlation Between Mfs Aggressive and Mfs Alabama
Can any of the company-specific risk be diversified away by investing in both Mfs Aggressive and Mfs Alabama 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 Aggressive and Mfs Alabama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Aggressive Growth and Mfs Alabama Municipal, you can compare the effects of market volatilities on Mfs Aggressive and Mfs Alabama 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 Aggressive with a short position of Mfs Alabama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Aggressive and Mfs Alabama.
Diversification Opportunities for Mfs Aggressive and Mfs Alabama
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mfs and Mfs is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Aggressive Growth and Mfs Alabama Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Alabama Municipal and Mfs Aggressive 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 Aggressive Growth are associated (or correlated) with Mfs Alabama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Alabama Municipal has no effect on the direction of Mfs Aggressive i.e., Mfs Aggressive and Mfs Alabama go up and down completely randomly.
Pair Corralation between Mfs Aggressive and Mfs Alabama
Assuming the 90 days horizon Mfs Aggressive Growth is expected to generate 1.65 times more return on investment than Mfs Alabama. However, Mfs Aggressive is 1.65 times more volatile than Mfs Alabama Municipal. It trades about 0.12 of its potential returns per unit of risk. Mfs Alabama Municipal is currently generating about 0.09 per unit of risk. If you would invest 3,106 in Mfs Aggressive Growth on August 26, 2024 and sell it today you would earn a total of 49.00 from holding Mfs Aggressive Growth or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Aggressive Growth vs. Mfs Alabama Municipal
Performance |
| Timeline |
| Mfs Aggressive Growth |
| Mfs Alabama Municipal |
Mfs Aggressive and Mfs Alabama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Aggressive and Mfs Alabama
The main advantage of trading using opposite Mfs Aggressive and Mfs Alabama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Aggressive position performs unexpectedly, Mfs Alabama 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 Alabama will offset losses from the drop in Mfs Alabama's long position.| Mfs Aggressive vs. Mfs Prudent Investor | Mfs Aggressive vs. Mfs Prudent Investor | Mfs Aggressive vs. Mfs Prudent Investor | Mfs Aggressive vs. Mfs Prudent Investor |
| Mfs Alabama vs. Mfs Prudent Investor | Mfs Alabama vs. Mfs Prudent Investor | Mfs Alabama vs. Mfs Prudent Investor | Mfs Alabama 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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