Correlation Between Mfs Technology and Optimum Small
Can any of the company-specific risk be diversified away by investing in both Mfs Technology and Optimum Small 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 Optimum Small 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 Optimum Small Mid Cap, you can compare the effects of market volatilities on Mfs Technology and Optimum Small 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 Optimum Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Technology and Optimum Small.
Diversification Opportunities for Mfs Technology and Optimum Small
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and Optimum is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Technology Fund and Optimum Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Small Mid 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 Optimum Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Small Mid has no effect on the direction of Mfs Technology i.e., Mfs Technology and Optimum Small go up and down completely randomly.
Pair Corralation between Mfs Technology and Optimum Small
Assuming the 90 days horizon Mfs Technology Fund is expected to generate 1.39 times more return on investment than Optimum Small. However, Mfs Technology is 1.39 times more volatile than Optimum Small Mid Cap. It trades about -0.05 of its potential returns per unit of risk. Optimum Small Mid Cap is currently generating about -0.29 per unit of risk. If you would invest 7,335 in Mfs Technology Fund on November 27, 2024 and sell it today you would lose (83.00) from holding Mfs Technology Fund or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Technology Fund vs. Optimum Small Mid Cap
Performance |
| Timeline |
| Mfs Technology |
| Optimum Small Mid |
Mfs Technology and Optimum Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Technology and Optimum Small
The main advantage of trading using opposite Mfs Technology and Optimum Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Technology position performs unexpectedly, Optimum Small 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 Optimum Small will offset losses from the drop in Optimum Small's long position.| Mfs Technology vs. Tiaa Cref Funds | Mfs Technology vs. First American Funds | Mfs Technology vs. Dreyfus Institutional Reserves | Mfs Technology vs. Franklin Government Money |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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