Correlation Between Mfs Total and Mfs Corporate
Can any of the company-specific risk be diversified away by investing in both Mfs Total and Mfs Corporate 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 Total and Mfs Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Total Return and Mfs Porate Bond, you can compare the effects of market volatilities on Mfs Total and Mfs Corporate 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 Total with a short position of Mfs Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Total and Mfs Corporate.
Diversification Opportunities for Mfs Total and Mfs Corporate
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mfs and Mfs is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Total Return and Mfs Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Porate Bond and Mfs Total 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 Total Return are associated (or correlated) with Mfs Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Porate Bond has no effect on the direction of Mfs Total i.e., Mfs Total and Mfs Corporate go up and down completely randomly.
Pair Corralation between Mfs Total and Mfs Corporate
Assuming the 90 days horizon Mfs Total is expected to generate 1.15 times less return on investment than Mfs Corporate. But when comparing it to its historical volatility, Mfs Total Return is 1.05 times less risky than Mfs Corporate. It trades about 0.1 of its potential returns per unit of risk. Mfs Porate Bond is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,197 in Mfs Porate Bond on September 5, 2024 and sell it today you would earn a total of 54.00 from holding Mfs Porate Bond or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.19% |
| Values | Daily Returns |
Mfs Total Return vs. Mfs Porate Bond
Performance |
| Timeline |
| Mfs Total Return |
| Mfs Porate Bond |
Mfs Total and Mfs Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Total and Mfs Corporate
The main advantage of trading using opposite Mfs Total and Mfs Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Total position performs unexpectedly, Mfs Corporate 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 Corporate will offset losses from the drop in Mfs Corporate's long position.| Mfs Total vs. Mfs Porate Bond | Mfs Total vs. Mfs High Income | Mfs Total vs. Mfs Limited Maturity | Mfs Total vs. Mfs Mid Cap |
| Mfs Corporate vs. Mfs Prudent Investor | Mfs Corporate vs. Mfs Prudent Investor | Mfs Corporate vs. Mfs Prudent Investor | Mfs Corporate vs. Mfs Prudent Investor |
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.
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