Correlation Between Nasdaq and MFS Active
Can any of the company-specific risk be diversified away by investing in both Nasdaq and MFS Active 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 Nasdaq and MFS Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and MFS Active Core, you can compare the effects of market volatilities on Nasdaq and MFS Active 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 Nasdaq with a short position of MFS Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and MFS Active.
Diversification Opportunities for Nasdaq and MFS Active
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nasdaq and MFS is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and MFS Active Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Active Core and Nasdaq 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 Nasdaq Inc are associated (or correlated) with MFS Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Active Core has no effect on the direction of Nasdaq i.e., Nasdaq and MFS Active go up and down completely randomly.
Pair Corralation between Nasdaq and MFS Active
Given the investment horizon of 90 days Nasdaq is expected to generate 164.57 times less return on investment than MFS Active. But when comparing it to its historical volatility, Nasdaq Inc is 96.86 times less risky than MFS Active. It trades about 0.08 of its potential returns per unit of risk. MFS Active Core is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.00 in MFS Active Core on December 4, 2024 and sell it today you would earn a total of 2,493 from holding MFS Active Core or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 12.15% |
| Values | Daily Returns |
Nasdaq Inc vs. MFS Active Core
Performance |
| Timeline |
| Nasdaq Inc |
| MFS Active Core |
Nasdaq and MFS Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and MFS Active
The main advantage of trading using opposite Nasdaq and MFS Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, MFS Active 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 Active will offset losses from the drop in MFS Active's long position.The idea behind Nasdaq Inc and MFS Active Core 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.| MFS Active vs. Columbia Diversified Fixed | MFS Active vs. Doubleline Etf Trust | MFS Active vs. Virtus Newfleet ABSMBS | MFS Active vs. Vident Core Bond |
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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