Correlation Between Schwab Small-cap and Mfs Technology
Can any of the company-specific risk be diversified away by investing in both Schwab Small-cap and Mfs Technology 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 Schwab Small-cap and Mfs Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Small Cap Index and Mfs Technology Fund, you can compare the effects of market volatilities on Schwab Small-cap and Mfs Technology 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 Schwab Small-cap with a short position of Mfs Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Small-cap and Mfs Technology.
Diversification Opportunities for Schwab Small-cap and Mfs Technology
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schwab and Mfs is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Small Cap Index and Mfs Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Technology and Schwab Small-cap 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 Schwab Small Cap Index are associated (or correlated) with Mfs Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Technology has no effect on the direction of Schwab Small-cap i.e., Schwab Small-cap and Mfs Technology go up and down completely randomly.
Pair Corralation between Schwab Small-cap and Mfs Technology
Assuming the 90 days horizon Schwab Small-cap is expected to generate 2.28 times less return on investment than Mfs Technology. But when comparing it to its historical volatility, Schwab Small Cap Index is 1.56 times less risky than Mfs Technology. It trades about 0.05 of its potential returns per unit of risk. Mfs Technology Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,401 in Mfs Technology Fund on November 4, 2024 and sell it today you would earn a total of 88.00 from holding Mfs Technology Fund or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Small Cap Index vs. Mfs Technology Fund
Performance |
| Timeline |
| Schwab Small Cap |
| Mfs Technology |
Schwab Small-cap and Mfs Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Small-cap and Mfs Technology
The main advantage of trading using opposite Schwab Small-cap and Mfs Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Small-cap position performs unexpectedly, Mfs Technology 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 Technology will offset losses from the drop in Mfs Technology's long position.| Schwab Small-cap vs. Schwab International Index | Schwab Small-cap vs. Schwab Total Stock | Schwab Small-cap vs. Schwab Sp 500 | Schwab Small-cap vs. Schwab 1000 Index |
| Mfs Technology vs. Calvert Moderate Allocation | Mfs Technology vs. Putnman Retirement Ready | Mfs Technology vs. Franklin Lifesmart Retirement | Mfs Technology vs. Blackrock Moderate Prepared |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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