Correlation Between Mfs Technology and Western Asset
Can any of the company-specific risk be diversified away by investing in both Mfs Technology and Western Asset 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 Technology and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Technology Fund and Western Asset Inflation, you can compare the effects of market volatilities on Mfs Technology and Western Asset 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 Technology with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Technology and Western Asset.
Diversification Opportunities for Mfs Technology and Western Asset
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mfs and Western is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Technology Fund and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation and Mfs Technology 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 Technology Fund are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Mfs Technology i.e., Mfs Technology and Western Asset go up and down completely randomly.
Pair Corralation between Mfs Technology and Western Asset
Assuming the 90 days horizon Mfs Technology Fund is expected to generate 3.76 times more return on investment than Western Asset. However, Mfs Technology is 3.76 times more volatile than Western Asset Inflation. It trades about 0.16 of its potential returns per unit of risk. Western Asset Inflation is currently generating about -0.04 per unit of risk. If you would invest 4,605 in Mfs Technology Fund on August 31, 2024 and sell it today you would earn a total of 539.00 from holding Mfs Technology Fund or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Technology Fund vs. Western Asset Inflation
Performance |
| Timeline |
| Mfs Technology |
| Western Asset Inflation |
Mfs Technology and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Technology and Western Asset
The main advantage of trading using opposite Mfs Technology and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Technology position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Mfs Technology vs. Principal Lifetime Hybrid | Mfs Technology vs. American Century Diversified | Mfs Technology vs. Lord Abbett Diversified | Mfs Technology vs. Adams Diversified Equity |
| Western Asset vs. Vanguard Inflation Protected Securities | Western Asset vs. Vanguard Inflation Protected Securities | Western Asset vs. American Funds Inflation | Western Asset vs. American Funds Inflation |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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