Correlation Between Nasdaq 100 and Mfs Technology
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 and Mfs Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and Mfs Technology Fund, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of Mfs Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Mfs Technology.
Diversification Opportunities for Nasdaq 100 and Mfs Technology
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq and Mfs is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Mfs Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Technology and Nasdaq 100 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 100 Index Fund 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 Nasdaq 100 i.e., Nasdaq 100 and Mfs Technology go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Mfs Technology
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 0.71 times more return on investment than Mfs Technology. However, Nasdaq 100 Index Fund is 1.41 times less risky than Mfs Technology. It trades about 0.12 of its potential returns per unit of risk. Mfs Technology Fund is currently generating about 0.06 per unit of risk. If you would invest 2,777 in Nasdaq 100 Index Fund on September 20, 2024 and sell it today you would earn a total of 2,442 from holding Nasdaq 100 Index Fund or generate 87.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Mfs Technology Fund
Performance |
| Timeline |
| Nasdaq 100 Index |
| Mfs Technology |
Nasdaq 100 and Mfs Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Mfs Technology
The main advantage of trading using opposite Nasdaq 100 and Mfs Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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.| Nasdaq 100 vs. Real Estate Ultrasector | Nasdaq 100 vs. Tiaa Cref Real Estate | Nasdaq 100 vs. Jhancock Real Estate | Nasdaq 100 vs. Forum Real Estate |
| Mfs Technology vs. Nasdaq 100 Index Fund | Mfs Technology vs. Predex Funds | Mfs Technology vs. Gmo Treasury Fund | Mfs Technology vs. Eic Value Fund |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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