Correlation Between Mfs Lifetime and Small Cap
Can any of the company-specific risk be diversified away by investing in both Mfs Lifetime and Small Cap 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 Lifetime and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Lifetime 2040 and Small Cap Stock, you can compare the effects of market volatilities on Mfs Lifetime and Small Cap 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 Lifetime with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Lifetime and Small Cap.
Diversification Opportunities for Mfs Lifetime and Small Cap
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and Small is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Lifetime 2040 and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock and Mfs Lifetime 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 Lifetime 2040 are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Mfs Lifetime i.e., Mfs Lifetime and Small Cap go up and down completely randomly.
Pair Corralation between Mfs Lifetime and Small Cap
Assuming the 90 days horizon Mfs Lifetime 2040 is expected to generate 0.69 times more return on investment than Small Cap. However, Mfs Lifetime 2040 is 1.45 times less risky than Small Cap. It trades about -0.31 of its potential returns per unit of risk. Small Cap Stock is currently generating about -0.36 per unit of risk. If you would invest 2,069 in Mfs Lifetime 2040 on October 9, 2024 and sell it today you would lose (139.00) from holding Mfs Lifetime 2040 or give up 6.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Lifetime 2040 vs. Small Cap Stock
Performance |
| Timeline |
| Mfs Lifetime 2040 |
| Small Cap Stock |
Mfs Lifetime and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Lifetime and Small Cap
The main advantage of trading using opposite Mfs Lifetime and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Lifetime position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Mfs Lifetime vs. Ftfa Franklin Templeton Growth | Mfs Lifetime vs. Calamos Growth Fund | Mfs Lifetime vs. The Hartford Growth | Mfs Lifetime vs. Rational Defensive Growth |
| Small Cap vs. Rational Defensive Growth | Small Cap vs. Mid Cap Growth | Small Cap vs. Small Pany Growth | Small Cap vs. Tfa Alphagen Growth |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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