Correlation Between Mfs Lifetime and Transamerica Large

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

By analyzing existing cross correlation between Mfs Lifetime 2045 and Transamerica Large Cap, you can compare the effects of market volatilities on Mfs Lifetime and Transamerica Large 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 Transamerica Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Lifetime and Transamerica Large.

Diversification Opportunities for Mfs Lifetime and Transamerica Large

0.9

Correlation Coefficient

Mfs Lifetime  Transamerica Large

Almost no diversification

The 3 months correlation between Mfs and Transamerica is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Lifetime 2045 and Transamerica Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Cap 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 2045 are associated (or correlated) with Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Cap has no effect on the direction of Mfs Lifetime i.e., Mfs Lifetime and Transamerica Large go up and down completely randomly.

Pair Corralation between Mfs Lifetime and Transamerica Large

Assuming the 90 days horizon Mfs Lifetime is expected to generate 1.35 times less return on investment than Transamerica Large. But when comparing it to its historical volatility, Mfs Lifetime 2045 is 1.22 times less risky than Transamerica Large. It trades about 0.16 of its potential returns per unit of risk. Transamerica Large Cap is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,464  in Transamerica Large Cap on September 3, 2024 and sell it today you would earn a total of  105.00  from holding Transamerica Large Cap or generate 7.17% return on investment over 90 days.

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

Mfs Lifetime 2045  vs.  Transamerica Large Cap

Mfs Lifetime 2045

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Lifetime 2045 are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mfs Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Transamerica Large Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Large Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Transamerica Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mfs Lifetime and Transamerica Large

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

The idea behind Mfs Lifetime 2045 and Transamerica Large Cap 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.