Correlation Between Visa and Mfs Lifetime
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Mfs Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Mfs Lifetime 2040, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Mfs Lifetime.
Diversification Opportunities for Visa and Mfs Lifetime
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Mfs is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Mfs Lifetime 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2040 and Visa 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 Visa Class A 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 2040 has no effect on the direction of Visa i.e., Visa and Mfs Lifetime go up and down completely randomly.
Pair Corralation between Visa and Mfs Lifetime
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.61 times more return on investment than Mfs Lifetime. However, Visa is 1.61 times more volatile than Mfs Lifetime 2040. It trades about 0.09 of its potential returns per unit of risk. Mfs Lifetime 2040 is currently generating about 0.09 per unit of risk. If you would invest 21,003 in Visa Class A on September 4, 2024 and sell it today you would earn a total of 10,662 from holding Visa Class A or generate 50.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Mfs Lifetime 2040
Performance |
| Timeline |
| Visa Class A |
| Mfs Lifetime 2040 |
Visa and Mfs Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Mfs Lifetime
The main advantage of trading using opposite Visa and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Mfs Lifetime vs. Artisan High Income | Mfs Lifetime vs. Prudential High Yield | Mfs Lifetime vs. T Rowe Price | Mfs Lifetime vs. Pioneer High Yield |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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