Correlation Between Mfs Utilities and Dominion Energy
Can any of the company-specific risk be diversified away by investing in both Mfs Utilities and Dominion Energy 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 Dominion Energy 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 Dominion Energy, you can compare the effects of market volatilities on Mfs Utilities and Dominion Energy 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 Dominion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Utilities and Dominion Energy.
Diversification Opportunities for Mfs Utilities and Dominion Energy
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mfs and Dominion is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Utilities Fund and Dominion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion Energy 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 Dominion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Energy has no effect on the direction of Mfs Utilities i.e., Mfs Utilities and Dominion Energy go up and down completely randomly.
Pair Corralation between Mfs Utilities and Dominion Energy
Assuming the 90 days horizon Mfs Utilities Fund is expected to generate 0.7 times more return on investment than Dominion Energy. However, Mfs Utilities Fund is 1.44 times less risky than Dominion Energy. It trades about -0.06 of its potential returns per unit of risk. Dominion Energy is currently generating about -0.22 per unit of risk. If you would invest 2,418 in Mfs Utilities Fund on September 12, 2024 and sell it today you would lose (25.00) from holding Mfs Utilities Fund or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mfs Utilities Fund vs. Dominion Energy
Performance |
| Timeline |
| Mfs Utilities |
| Dominion Energy |
Mfs Utilities and Dominion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Utilities and Dominion Energy
The main advantage of trading using opposite Mfs Utilities and Dominion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Utilities position performs unexpectedly, Dominion Energy 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 Dominion Energy will offset losses from the drop in Dominion Energy's long position.| Mfs Utilities vs. Applied Finance Explorer | Mfs Utilities vs. Victory Rs Partners | Mfs Utilities vs. Lord Abbett Small | Mfs Utilities vs. Fidelity Small Cap |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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