Correlation Between Mfs Utilities and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Mfs Utilities and Franklin Utilities 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 Utilities and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Utilities Fund and Franklin Utilities Fund, you can compare the effects of market volatilities on Mfs Utilities and Franklin Utilities 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 Utilities with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Utilities and Franklin Utilities.
Diversification Opportunities for Mfs Utilities and Franklin Utilities
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MFS and Franklin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Utilities Fund and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Mfs Utilities 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 Utilities Fund are associated (or correlated) with Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Mfs Utilities i.e., Mfs Utilities and Franklin Utilities go up and down completely randomly.
Pair Corralation between Mfs Utilities and Franklin Utilities
Assuming the 90 days horizon Mfs Utilities is expected to generate 1.79 times less return on investment than Franklin Utilities. But when comparing it to its historical volatility, Mfs Utilities Fund is 1.05 times less risky than Franklin Utilities. It trades about 0.04 of its potential returns per unit of risk. Franklin Utilities Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,004 in Franklin Utilities Fund on August 31, 2024 and sell it today you would earn a total of 579.00 from holding Franklin Utilities Fund or generate 28.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Mfs Utilities Fund vs. Franklin Utilities Fund
Performance |
| Timeline |
| Mfs Utilities |
| Franklin Utilities |
Mfs Utilities and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Utilities and Franklin Utilities
The main advantage of trading using opposite Mfs Utilities and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Utilities position performs unexpectedly, Franklin Utilities 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 Franklin Utilities will offset losses from the drop in Franklin Utilities' long position.| Mfs Utilities vs. Victory Strategic Allocation | Mfs Utilities vs. Jhancock Disciplined Value | Mfs Utilities vs. Goldman Sachs Large | Mfs Utilities vs. Qs Large Cap |
| Franklin Utilities vs. Rbc Emerging Markets | Franklin Utilities vs. Harbor Diversified International | Franklin Utilities vs. Pnc Emerging Markets | Franklin Utilities vs. Doubleline Emerging Markets |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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