Correlation Between Mfs Corporate and Mfs Core
Can any of the company-specific risk be diversified away by investing in both Mfs Corporate and Mfs Core 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 Corporate and Mfs Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Porate Bond and Mfs E Equity, you can compare the effects of market volatilities on Mfs Corporate and Mfs Core 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 Corporate with a short position of Mfs Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Corporate and Mfs Core.
Diversification Opportunities for Mfs Corporate and Mfs Core
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mfs and Mfs is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Porate Bond and Mfs E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs E Equity and Mfs Corporate 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 Porate Bond are associated (or correlated) with Mfs Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs E Equity has no effect on the direction of Mfs Corporate i.e., Mfs Corporate and Mfs Core go up and down completely randomly.
Pair Corralation between Mfs Corporate and Mfs Core
Assuming the 90 days horizon Mfs Corporate is expected to generate 6.95 times less return on investment than Mfs Core. But when comparing it to its historical volatility, Mfs Porate Bond is 2.17 times less risky than Mfs Core. It trades about 0.11 of its potential returns per unit of risk. Mfs E Equity is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 5,348 in Mfs E Equity on September 3, 2024 and sell it today you would earn a total of 308.00 from holding Mfs E Equity or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Porate Bond vs. Mfs E Equity
Performance |
| Timeline |
| Mfs Porate Bond |
| Mfs E Equity |
Mfs Corporate and Mfs Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Corporate and Mfs Core
The main advantage of trading using opposite Mfs Corporate and Mfs Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Corporate position performs unexpectedly, Mfs Core 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 Core will offset losses from the drop in Mfs Core's long position.The idea behind Mfs Porate Bond and Mfs E Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Mfs Core vs. Mfs Growth Fund | Mfs Core vs. Mfs Mid Cap | Mfs Core vs. Mfs Porate Bond | Mfs Core vs. Mfs Total Return |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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