Correlation Between Mfs Value and American Balanced
Can any of the company-specific risk be diversified away by investing in both Mfs Value and American Balanced 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 American Balanced 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 American Balanced Fund, you can compare the effects of market volatilities on Mfs Value and American Balanced 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 American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Value and American Balanced.
Diversification Opportunities for Mfs Value and American Balanced
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and American is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Value Fund and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced 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 American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of Mfs Value i.e., Mfs Value and American Balanced go up and down completely randomly.
Pair Corralation between Mfs Value and American Balanced
Assuming the 90 days horizon Mfs Value Fund is expected to generate 1.2 times more return on investment than American Balanced. However, Mfs Value is 1.2 times more volatile than American Balanced Fund. It trades about 0.22 of its potential returns per unit of risk. American Balanced Fund is currently generating about 0.11 per unit of risk. If you would invest 4,826 in Mfs Value Fund on November 28, 2024 and sell it today you would earn a total of 269.00 from holding Mfs Value Fund or generate 5.57% 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. American Balanced Fund
Performance |
| Timeline |
| Mfs Value Fund |
| American Balanced |
Mfs Value and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Value and American Balanced
The main advantage of trading using opposite Mfs Value and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Value position performs unexpectedly, American Balanced 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 American Balanced will offset losses from the drop in American Balanced's long position.| Mfs Value vs. Mfs Growth Fund | Mfs Value vs. Prudential Total Return | Mfs Value vs. Mfs International Diversification | Mfs Value vs. Mfs Mid Cap |
| American Balanced vs. Washington Mutual Investors | American Balanced vs. New Perspective Fund | American Balanced vs. Amcap Fund Class | American Balanced vs. Growth Fund Of |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |