Correlation Between Europac Gold and Mfs Lifetime

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

By analyzing existing cross correlation between Europac Gold Fund and Mfs Lifetime 2060, you can compare the effects of market volatilities on Europac Gold 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 Europac Gold with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europac Gold and Mfs Lifetime.

Diversification Opportunities for Europac Gold and Mfs Lifetime

-0.22

Correlation Coefficient

Europac Gold  Mfs Lifetime

Very good diversification

The 3 months correlation between Europac and Mfs is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Mfs Lifetime 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2060 and Europac Gold 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 Europac Gold 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 2060 has no effect on the direction of Europac Gold i.e., Europac Gold and Mfs Lifetime go up and down completely randomly.

Pair Corralation between Europac Gold and Mfs Lifetime

Assuming the 90 days horizon Europac Gold Fund is expected to under-perform the Mfs Lifetime. In addition to that, Europac Gold is 4.17 times more volatile than Mfs Lifetime 2060. It trades about -0.09 of its total potential returns per unit of risk. Mfs Lifetime 2060 is currently generating about 0.1 per unit of volatility. If you would invest  1,679  in Mfs Lifetime 2060 on September 14, 2024 and sell it today you would earn a total of  54.00  from holding Mfs Lifetime 2060 or generate 3.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Europac Gold Fund  vs.  Mfs Lifetime 2060

Europac Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europac Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Mfs Lifetime 2060

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Lifetime 2060 are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Mfs Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Europac Gold and Mfs Lifetime

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

The idea behind Europac Gold Fund and Mfs Lifetime 2060 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.