Correlation Between Vanguard Intermediate and MFS Active
Can any of the company-specific risk be diversified away by investing in both Vanguard Intermediate and MFS Active 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 Vanguard Intermediate and MFS Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Intermediate Term Treasury and MFS Active Exchange, you can compare the effects of market volatilities on Vanguard Intermediate and MFS Active 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 Vanguard Intermediate with a short position of MFS Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Intermediate and MFS Active.
Diversification Opportunities for Vanguard Intermediate and MFS Active
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vanguard and MFS is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Tre and MFS Active Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Active Exchange and Vanguard Intermediate 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 Vanguard Intermediate Term Treasury are associated (or correlated) with MFS Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Active Exchange has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and MFS Active go up and down completely randomly.
Pair Corralation between Vanguard Intermediate and MFS Active
Given the investment horizon of 90 days Vanguard Intermediate Term Treasury is expected to generate 0.93 times more return on investment than MFS Active. However, Vanguard Intermediate Term Treasury is 1.07 times less risky than MFS Active. It trades about 0.07 of its potential returns per unit of risk. MFS Active Exchange is currently generating about 0.05 per unit of risk. If you would invest 5,781 in Vanguard Intermediate Term Treasury on October 25, 2024 and sell it today you would earn a total of 21.00 from holding Vanguard Intermediate Term Treasury or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Intermediate Term Tre vs. MFS Active Exchange
Performance |
| Timeline |
| Vanguard Intermediate |
| MFS Active Exchange |
Vanguard Intermediate and MFS Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Intermediate and MFS Active
The main advantage of trading using opposite Vanguard Intermediate and MFS Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Intermediate position performs unexpectedly, MFS Active 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 Active will offset losses from the drop in MFS Active's long position.The idea behind Vanguard Intermediate Term Treasury and MFS Active Exchange pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| MFS Active vs. First Trust Exchange Traded | MFS Active vs. Vanguard Intermediate Term Treasury | MFS Active vs. Vanguard Long Term Treasury | MFS Active vs. Vanguard Short Term Treasury |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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