Correlation Between American Funds and Mfs Growth
Can any of the company-specific risk be diversified away by investing in both American Funds and Mfs Growth 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 American Funds and Mfs Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and Mfs Growth Fund, you can compare the effects of market volatilities on American Funds and Mfs Growth 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 American Funds with a short position of Mfs Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Mfs Growth.
Diversification Opportunities for American Funds and Mfs Growth
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Mfs is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Mfs Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Growth Fund and American Funds 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 American Funds Retirement are associated (or correlated) with Mfs Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Growth Fund has no effect on the direction of American Funds i.e., American Funds and Mfs Growth go up and down completely randomly.
Pair Corralation between American Funds and Mfs Growth
Assuming the 90 days horizon American Funds is expected to generate 1.66 times less return on investment than Mfs Growth. But when comparing it to its historical volatility, American Funds Retirement is 3.17 times less risky than Mfs Growth. It trades about 0.27 of its potential returns per unit of risk. Mfs Growth Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 20,379 in Mfs Growth Fund on November 3, 2024 and sell it today you would earn a total of 815.00 from holding Mfs Growth Fund or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Retirement vs. Mfs Growth Fund
Performance |
| Timeline |
| American Funds Retirement |
| Mfs Growth Fund |
American Funds and Mfs Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Mfs Growth
The main advantage of trading using opposite American Funds and Mfs Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Mfs Growth 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 Growth will offset losses from the drop in Mfs Growth's long position.| American Funds vs. Putnam Retirement Advantage | American Funds vs. Dimensional Retirement Income | American Funds vs. Mainstay Moderate Etf | American Funds vs. Voya Retirement Servative |
| Mfs Growth vs. Tax Managed Mid Small | Mfs Growth vs. Kinetics Small Cap | Mfs Growth vs. Small Pany Growth | Mfs Growth vs. Franklin Small Cap |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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