Correlation Between Mfs Lifetime and Mfs New

Can any of the company-specific risk be diversified away by investing in both Mfs Lifetime and Mfs New 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 New 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 New Discovery, you can compare the effects of market volatilities on Mfs Lifetime and Mfs New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Lifetime and Mfs New.

Diversification Opportunities for Mfs Lifetime and Mfs New

0.82

Correlation Coefficient

Mfs Lifetime  Mfs New

Very poor diversification

The 3 months correlation between Mfs and Mfs is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Lifetime 2065 and Mfs New Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs New Discovery 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs New Discovery has no effect on the direction of Mfs Lifetime i.e., Mfs Lifetime and Mfs New go up and down completely randomly.

Pair Corralation between Mfs Lifetime and Mfs New

Assuming the 90 days horizon Mfs Lifetime 2065 is expected to generate 0.62 times more return on investment than Mfs New. However, Mfs Lifetime 2065 is 1.6 times less risky than Mfs New. It trades about 0.09 of its potential returns per unit of risk. Mfs New Discovery is currently generating about 0.05 per unit of risk. If you would invest  787.00  in Mfs Lifetime 2065 on September 5, 2024 and sell it today you would earn a total of  270.00  from holding Mfs Lifetime 2065 or generate 34.31% return on investment over 90 days.

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

Mfs Lifetime 2065  vs.  Mfs New Discovery

Mfs Lifetime 2065

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Lifetime 2065 are ranked lower than 12 (%) 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 New Discovery

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs New Discovery are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mfs New may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mfs Lifetime and Mfs New

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

The idea behind Mfs Lifetime 2065 and Mfs New Discovery 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.