Correlation Between Mfs California and Mfs Value
Can any of the company-specific risk be diversified away by investing in both Mfs California and Mfs Value 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 California and Mfs Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs California Municipal and Mfs Value Fund, you can compare the effects of market volatilities on Mfs California and Mfs Value 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 California with a short position of Mfs Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs California and Mfs Value.
Diversification Opportunities for Mfs California and Mfs Value
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mfs and Mfs is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Mfs California Municipal and Mfs Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Value Fund and Mfs California 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 California Municipal are associated (or correlated) with Mfs Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Value Fund has no effect on the direction of Mfs California i.e., Mfs California and Mfs Value go up and down completely randomly.
Pair Corralation between Mfs California and Mfs Value
Assuming the 90 days horizon Mfs California is expected to generate 2.48 times less return on investment than Mfs Value. But when comparing it to its historical volatility, Mfs California Municipal is 2.55 times less risky than Mfs Value. It trades about 0.17 of its potential returns per unit of risk. Mfs Value Fund is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,295 in Mfs Value Fund on September 1, 2024 and sell it today you would earn a total of 1,277 from holding Mfs Value Fund or generate 29.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs California Municipal vs. Mfs Value Fund
Performance |
| Timeline |
| Mfs California Municipal |
| Mfs Value Fund |
Mfs California and Mfs Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs California and Mfs Value
The main advantage of trading using opposite Mfs California and Mfs Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs California position performs unexpectedly, Mfs Value 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 Value will offset losses from the drop in Mfs Value's long position.| Mfs California vs. Mfs Prudent Investor | Mfs California vs. Mfs Prudent Investor | Mfs California vs. Mfs Prudent Investor | Mfs California vs. Mfs Prudent Investor |
| Mfs Value vs. Locorr Market Trend | Mfs Value vs. Aqr Long Short Equity | Mfs Value vs. Vanguard Developed Markets | Mfs Value vs. Doubleline Emerging Markets |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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