Correlation Between California Bond and Mfs Lifetime
Can any of the company-specific risk be diversified away by investing in both California Bond and Mfs Lifetime 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 California Bond and Mfs Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Bond Fund and Mfs Lifetime 2065, you can compare the effects of market volatilities on California Bond and Mfs Lifetime 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 California Bond with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Mfs Lifetime.
Diversification Opportunities for California Bond and Mfs Lifetime
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between California and Mfs is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Mfs Lifetime 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2065 and California Bond 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 California Bond Fund are associated (or correlated) with Mfs Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Lifetime 2065 has no effect on the direction of California Bond i.e., California Bond and Mfs Lifetime go up and down completely randomly.
Pair Corralation between California Bond and Mfs Lifetime
Assuming the 90 days horizon California Bond is expected to generate 2.33 times less return on investment than Mfs Lifetime. But when comparing it to its historical volatility, California Bond Fund is 1.52 times less risky than Mfs Lifetime. It trades about 0.22 of its potential returns per unit of risk. Mfs Lifetime 2065 is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,023 in Mfs Lifetime 2065 on September 1, 2024 and sell it today you would earn a total of 39.00 from holding Mfs Lifetime 2065 or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
California Bond Fund vs. Mfs Lifetime 2065
Performance |
| Timeline |
| California Bond |
| Mfs Lifetime 2065 |
California Bond and Mfs Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Mfs Lifetime
The main advantage of trading using opposite California Bond and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Mfs Lifetime 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 Lifetime will offset losses from the drop in Mfs Lifetime's long position.| California Bond vs. Income Fund Income | California Bond vs. Usaa Nasdaq 100 | California Bond vs. Intermediate Term Bond Fund | California Bond vs. Usaa Intermediate Term |
| Mfs Lifetime vs. Mfs Prudent Investor | Mfs Lifetime vs. Mfs Prudent Investor | Mfs Lifetime vs. Mfs Prudent Investor | Mfs Lifetime vs. Mfs Prudent Investor |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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