Correlation Between Red Oak and Mfs Research
Can any of the company-specific risk be diversified away by investing in both Red Oak and Mfs Research 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 Red Oak and Mfs Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Oak Technology and Mfs Research Fund, you can compare the effects of market volatilities on Red Oak and Mfs Research 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 Red Oak with a short position of Mfs Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Mfs Research.
Diversification Opportunities for Red Oak and Mfs Research
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Mfs is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Mfs Research Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Research and Red Oak 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 Red Oak Technology are associated (or correlated) with Mfs Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Research has no effect on the direction of Red Oak i.e., Red Oak and Mfs Research go up and down completely randomly.
Pair Corralation between Red Oak and Mfs Research
Assuming the 90 days horizon Red Oak Technology is expected to generate 1.42 times more return on investment than Mfs Research. However, Red Oak is 1.42 times more volatile than Mfs Research Fund. It trades about 0.03 of its potential returns per unit of risk. Mfs Research Fund is currently generating about 0.02 per unit of risk. If you would invest 3,916 in Red Oak Technology on December 12, 2024 and sell it today you would earn a total of 426.00 from holding Red Oak Technology or generate 10.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Oak Technology vs. Mfs Research Fund
Performance |
| Timeline |
| Red Oak Technology |
| Mfs Research |
Red Oak and Mfs Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Oak and Mfs Research
The main advantage of trading using opposite Red Oak and Mfs Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Oak position performs unexpectedly, Mfs Research 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 Research will offset losses from the drop in Mfs Research's long position.| Red Oak vs. Pin Oak Equity | ||
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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