Correlation Between Lord Abbett and Mfs Utilities

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

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

Diversification Opportunities for Lord Abbett and Mfs Utilities

-0.11

Correlation Coefficient

Lord Abbett  Mfs Utilities

Good diversification

The 3 months correlation between Lord and Mfs is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Health and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities and Lord Abbett 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 Lord Abbett Health are associated (or correlated) with Mfs Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Lord Abbett i.e., Lord Abbett and Mfs Utilities go up and down completely randomly.

Pair Corralation between Lord Abbett and Mfs Utilities

Assuming the 90 days horizon Lord Abbett is expected to generate 1.17 times less return on investment than Mfs Utilities. In addition to that, Lord Abbett is 1.24 times more volatile than Mfs Utilities Fund. It trades about 0.11 of its total potential returns per unit of risk. Mfs Utilities Fund is currently generating about 0.16 per unit of volatility. If you would invest  2,346  in Mfs Utilities Fund on September 5, 2024 and sell it today you would earn a total of  74.00  from holding Mfs Utilities Fund or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Lord Abbett Health  vs.  Mfs Utilities Fund

Lord Abbett Health

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Health are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Lord Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Utilities

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Utilities Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mfs Utilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lord Abbett and Mfs Utilities

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

The idea behind Lord Abbett Health and Mfs Utilities 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.