Correlation Between Mfs Value and Mfs Mid
Can any of the company-specific risk be diversified away by investing in both Mfs Value and Mfs Mid 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 Value and Mfs Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Value Fund and Mfs Mid Cap, you can compare the effects of market volatilities on Mfs Value and Mfs Mid 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 Value with a short position of Mfs Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Value and Mfs Mid.
Diversification Opportunities for Mfs Value and Mfs Mid
Very poor diversification
The 3 months correlation between Mfs and Mfs is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Value Fund and Mfs Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Mid Cap and Mfs Value 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 Value Fund are associated (or correlated) with Mfs Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Mid Cap has no effect on the direction of Mfs Value i.e., Mfs Value and Mfs Mid go up and down completely randomly.
Pair Corralation between Mfs Value and Mfs Mid
Assuming the 90 days horizon Mfs Value is expected to generate 1.23 times less return on investment than Mfs Mid. But when comparing it to its historical volatility, Mfs Value Fund is 1.47 times less risky than Mfs Mid. It trades about 0.1 of its potential returns per unit of risk. Mfs Mid Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,692 in Mfs Mid Cap on August 26, 2024 and sell it today you would earn a total of 764.00 from holding Mfs Mid Cap or generate 28.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Value Fund vs. Mfs Mid Cap
Performance |
| Timeline |
| Mfs Value Fund |
| Mfs Mid Cap |
Mfs Value and Mfs Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Value and Mfs Mid
The main advantage of trading using opposite Mfs Value and Mfs Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Value position performs unexpectedly, Mfs Mid 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 Mid will offset losses from the drop in Mfs Mid's long position.| Mfs Value vs. Mfs Prudent Investor | Mfs Value vs. Mfs Prudent Investor | Mfs Value vs. Mfs Prudent Investor | Mfs Value vs. Mfs Prudent Investor |
| Mfs Mid vs. Tortoise Energy Independence | Mfs Mid vs. Jennison Natural Resources | Mfs Mid vs. Clearbridge Energy Mlp | Mfs Mid vs. Franklin Natural Resources |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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