Correlation Between Mfs New and Massachusetts Investors
Can any of the company-specific risk be diversified away by investing in both Mfs New and Massachusetts Investors 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 New and Massachusetts Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs New Discovery and Massachusetts Investors Growth, you can compare the effects of market volatilities on Mfs New and Massachusetts Investors 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 New with a short position of Massachusetts Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs New and Massachusetts Investors.
Diversification Opportunities for Mfs New and Massachusetts Investors
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and MASSACHUSETTS is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mfs New Discovery and Massachusetts Investors Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massachusetts Investors and Mfs New 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 New Discovery are associated (or correlated) with Massachusetts Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massachusetts Investors has no effect on the direction of Mfs New i.e., Mfs New and Massachusetts Investors go up and down completely randomly.
Pair Corralation between Mfs New and Massachusetts Investors
Assuming the 90 days horizon Mfs New Discovery is expected to generate 1.58 times more return on investment than Massachusetts Investors. However, Mfs New is 1.58 times more volatile than Massachusetts Investors Growth. It trades about 0.23 of its potential returns per unit of risk. Massachusetts Investors Growth is currently generating about 0.07 per unit of risk. If you would invest 2,532 in Mfs New Discovery on August 30, 2024 and sell it today you would earn a total of 156.00 from holding Mfs New Discovery or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Mfs New Discovery vs. Massachusetts Investors Growth
Performance |
| Timeline |
| Mfs New Discovery |
| Massachusetts Investors |
Mfs New and Massachusetts Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs New and Massachusetts Investors
The main advantage of trading using opposite Mfs New and Massachusetts Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs New position performs unexpectedly, Massachusetts Investors 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 Massachusetts Investors will offset losses from the drop in Massachusetts Investors' long position.| Mfs New vs. Mfs Mid Cap | Mfs New vs. Massachusetts Investors Growth | Mfs New vs. Mfs Growth Fund | Mfs New vs. Mfs Value Fund |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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