Correlation Between Mfs Utilities and Utilities Portfolio
Can any of the company-specific risk be diversified away by investing in both Mfs Utilities and Utilities Portfolio 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 Utilities and Utilities Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Utilities Fund and Utilities Portfolio Utilities, you can compare the effects of market volatilities on Mfs Utilities and Utilities Portfolio 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 Utilities with a short position of Utilities Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Utilities and Utilities Portfolio.
Diversification Opportunities for Mfs Utilities and Utilities Portfolio
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and Utilities is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Utilities Fund and Utilities Portfolio Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Portfolio and Mfs Utilities 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 Utilities Fund are associated (or correlated) with Utilities Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Portfolio has no effect on the direction of Mfs Utilities i.e., Mfs Utilities and Utilities Portfolio go up and down completely randomly.
Pair Corralation between Mfs Utilities and Utilities Portfolio
Assuming the 90 days horizon Mfs Utilities is expected to generate 1.73 times less return on investment than Utilities Portfolio. But when comparing it to its historical volatility, Mfs Utilities Fund is 1.28 times less risky than Utilities Portfolio. It trades about 0.18 of its potential returns per unit of risk. Utilities Portfolio Utilities is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 12,647 in Utilities Portfolio Utilities on September 1, 2024 and sell it today you would earn a total of 729.00 from holding Utilities Portfolio Utilities or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Utilities Fund vs. Utilities Portfolio Utilities
Performance |
| Timeline |
| Mfs Utilities |
| Utilities Portfolio |
Mfs Utilities and Utilities Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Utilities and Utilities Portfolio
The main advantage of trading using opposite Mfs Utilities and Utilities Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Utilities position performs unexpectedly, Utilities Portfolio 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 Utilities Portfolio will offset losses from the drop in Utilities Portfolio's long position.| Mfs Utilities vs. Dominion Energy | Mfs Utilities vs. Atlantica Sustainable Infrastructure | Mfs Utilities vs. Consolidated Edison | Mfs Utilities vs. Eversource Energy |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |