Correlation Between Bts Tactical and Mfs Technology

Can any of the company-specific risk be diversified away by investing in both Bts Tactical 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 Bts Tactical and Mfs Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bts Tactical Fixed and Mfs Technology Fund, you can compare the effects of market volatilities on Bts Tactical 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 Bts Tactical with a short position of Mfs Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bts Tactical and Mfs Technology.

Diversification Opportunities for Bts Tactical and Mfs Technology

0.59

Correlation Coefficient

Bts Tactical  Mfs Technology

Very weak diversification

The 3 months correlation between Bts and Mfs is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bts Tactical Fixed and Mfs Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Technology and Bts Tactical 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 Bts Tactical Fixed 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 Bts Tactical i.e., Bts Tactical and Mfs Technology go up and down completely randomly.

Pair Corralation between Bts Tactical and Mfs Technology

Assuming the 90 days horizon Bts Tactical is expected to generate 33.34 times less return on investment than Mfs Technology. But when comparing it to its historical volatility, Bts Tactical Fixed is 5.35 times less risky than Mfs Technology. It trades about 0.03 of its potential returns per unit of risk. Mfs Technology Fund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4,772  in Mfs Technology Fund on September 17, 2024 and sell it today you would earn a total of  642.00  from holding Mfs Technology Fund or generate 13.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bts Tactical Fixed  vs.  Mfs Technology Fund

Bts Tactical Fixed

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bts Tactical Fixed are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Bts Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Technology Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Mfs Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bts Tactical and Mfs Technology

The main advantage of trading using opposite Bts Tactical and Mfs Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bts Tactical 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.

The idea behind Bts Tactical Fixed and Mfs Technology Fund 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.