Correlation Between Madison Investors and Mfs Series
Can any of the company-specific risk be diversified away by investing in both Madison Investors and Mfs Series 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 Madison Investors and Mfs Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison Investors Fund and Mfs Series Trust, you can compare the effects of market volatilities on Madison Investors and Mfs Series 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 Madison Investors with a short position of Mfs Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Investors and Mfs Series.
Diversification Opportunities for Madison Investors and Mfs Series
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Madison and Mfs is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Madison Investors Fund and Mfs Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Series Trust and Madison Investors 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 Madison Investors Fund are associated (or correlated) with Mfs Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Series Trust has no effect on the direction of Madison Investors i.e., Madison Investors and Mfs Series go up and down completely randomly.
Pair Corralation between Madison Investors and Mfs Series
Assuming the 90 days horizon Madison Investors is expected to generate 4.39 times less return on investment than Mfs Series. In addition to that, Madison Investors is 1.33 times more volatile than Mfs Series Trust. It trades about 0.02 of its total potential returns per unit of risk. Mfs Series Trust is currently generating about 0.1 per unit of volatility. If you would invest 944.00 in Mfs Series Trust on December 11, 2024 and sell it today you would earn a total of 216.00 from holding Mfs Series Trust or generate 22.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.67% |
| Values | Daily Returns |
Madison Investors Fund vs. Mfs Series Trust
Performance |
| Timeline |
| Madison Investors |
| Mfs Series Trust |
Madison Investors and Mfs Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Investors and Mfs Series
The main advantage of trading using opposite Madison Investors and Mfs Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Investors position performs unexpectedly, Mfs Series 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 Series will offset losses from the drop in Mfs Series' long position.The idea behind Madison Investors Fund and Mfs Series Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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