Correlation Between Mfs New and Mfs Total
Can any of the company-specific risk be diversified away by investing in both Mfs New and Mfs Total 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 Mfs Total 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 Mfs Total Return, you can compare the effects of market volatilities on Mfs New and Mfs Total 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 Mfs Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs New and Mfs Total.
Diversification Opportunities for Mfs New and Mfs Total
Very poor diversification
The 3 months correlation between Mfs and Mfs is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Mfs New Discovery and Mfs Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Total Return 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 Mfs Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Total Return has no effect on the direction of Mfs New i.e., Mfs New and Mfs Total go up and down completely randomly.
Pair Corralation between Mfs New and Mfs Total
Assuming the 90 days horizon Mfs New Discovery is expected to generate 2.19 times more return on investment than Mfs Total. However, Mfs New is 2.19 times more volatile than Mfs Total Return. It trades about 0.04 of its potential returns per unit of risk. Mfs Total Return is currently generating about 0.07 per unit of risk. If you would invest 2,300 in Mfs New Discovery on August 26, 2024 and sell it today you would earn a total of 329.00 from holding Mfs New Discovery or generate 14.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs New Discovery vs. Mfs Total Return
Performance |
| Timeline |
| Mfs New Discovery |
| Mfs Total Return |
Mfs New and Mfs Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs New and Mfs Total
The main advantage of trading using opposite Mfs New and Mfs Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs New position performs unexpectedly, Mfs Total 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 Total will offset losses from the drop in Mfs Total's long position.| Mfs New vs. Mfs Prudent Investor | Mfs New vs. Mfs Prudent Investor | Mfs New vs. Mfs Prudent Investor | Mfs New vs. Mfs Prudent Investor |
| Mfs Total vs. Amg River Road | Mfs Total vs. Pace Smallmedium Value | Mfs Total vs. Vanguard Small Cap Value | Mfs Total vs. Ultrasmall Cap Profund Ultrasmall 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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