Correlation Between Sit Government and Mfs Utilities
Can any of the company-specific risk be diversified away by investing in both Sit Government and Mfs 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 Sit Government and Mfs Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sit Government Securities and Mfs Utilities Fund, you can compare the effects of market volatilities on Sit Government and Mfs 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 Sit Government with a short position of Mfs Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Government and Mfs Utilities.
Diversification Opportunities for Sit Government and Mfs Utilities
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sit and Mfs is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sit Government Securities and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities and Sit Government 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 Sit Government Securities are associated (or correlated) with Mfs Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Sit Government i.e., Sit Government and Mfs Utilities go up and down completely randomly.
Pair Corralation between Sit Government and Mfs Utilities
Assuming the 90 days horizon Sit Government Securities is expected to generate 0.26 times more return on investment than Mfs Utilities. However, Sit Government Securities is 3.9 times less risky than Mfs Utilities. It trades about 0.19 of its potential returns per unit of risk. Mfs Utilities Fund is currently generating about -0.07 per unit of risk. If you would invest 1,019 in Sit Government Securities on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Sit Government Securities or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sit Government Securities vs. Mfs Utilities Fund
Performance |
| Timeline |
| Sit Government Securities |
| Mfs Utilities |
Sit Government and Mfs Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Government and Mfs Utilities
The main advantage of trading using opposite Sit Government and Mfs Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Government position performs unexpectedly, Mfs 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 Mfs Utilities will offset losses from the drop in Mfs Utilities' long position.| Sit Government vs. Sit Small Cap | Sit Government vs. Sit Global Dividend | Sit Government vs. Sit Global Dividend | Sit Government vs. Sit Small Cap |
| Mfs Utilities vs. Small Pany Growth | Mfs Utilities vs. Tfa Alphagen Growth | Mfs Utilities vs. Pace Smallmedium Growth | Mfs Utilities vs. Mid Cap Growth |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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