Correlation Between Mfs Lifetime and Mfs Government

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

By analyzing existing cross correlation between Mfs Lifetime 2065 and Mfs Government Securities, you can compare the effects of market volatilities on Mfs Lifetime and Mfs Government 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 Mfs Lifetime with a short position of Mfs Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Lifetime and Mfs Government.

Diversification Opportunities for Mfs Lifetime and Mfs Government

-0.54

Correlation Coefficient

Mfs Lifetime  Mfs Government

Excellent diversification

The 3 months correlation between Mfs and Mfs is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Lifetime 2065 and Mfs Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Government Securities and Mfs Lifetime 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 Mfs Lifetime 2065 are associated (or correlated) with Mfs Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Government Securities has no effect on the direction of Mfs Lifetime i.e., Mfs Lifetime and Mfs Government go up and down completely randomly.

Pair Corralation between Mfs Lifetime and Mfs Government

Assuming the 90 days horizon Mfs Lifetime 2065 is expected to generate 1.84 times more return on investment than Mfs Government. However, Mfs Lifetime is 1.84 times more volatile than Mfs Government Securities. It trades about 0.14 of its potential returns per unit of risk. Mfs Government Securities is currently generating about -0.06 per unit of risk. If you would invest  1,009  in Mfs Lifetime 2065 on September 2, 2024 and sell it today you would earn a total of  51.00  from holding Mfs Lifetime 2065 or generate 5.05% return on investment over 90 days.

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

Mfs Lifetime 2065  vs.  Mfs Government Securities

Mfs Lifetime 2065

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Lifetime 2065 are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Mfs Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs Government Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Mfs Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mfs Lifetime and Mfs Government

The main advantage of trading using opposite Mfs Lifetime and Mfs Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Lifetime position performs unexpectedly, Mfs Government 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 Government will offset losses from the drop in Mfs Government's long position.

The idea behind Mfs Lifetime 2065 and Mfs Government Securities 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.