Correlation Between Mfs New and Mfs Research

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Can any of the company-specific risk be diversified away by investing in both Mfs New and Mfs Research 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 New and Mfs Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs New Discovery and Mfs Research International, you can compare the effects of market volatilities on Mfs New and Mfs Research 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 New with a short position of Mfs Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs New and Mfs Research.

Diversification Opportunities for Mfs New and Mfs Research

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Mfs and Mfs is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mfs New Discovery and Mfs Research International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Research Interna and Mfs New 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 New Discovery are associated (or correlated) with Mfs Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Research Interna has no effect on the direction of Mfs New i.e., Mfs New and Mfs Research go up and down completely randomly.

Pair Corralation between Mfs New and Mfs Research

Assuming the 90 days horizon Mfs New Discovery is expected to generate 1.46 times more return on investment than Mfs Research. However, Mfs New is 1.46 times more volatile than Mfs Research International. It trades about 0.06 of its potential returns per unit of risk. Mfs Research International is currently generating about 0.04 per unit of risk. If you would invest  2,154  in Mfs New Discovery on September 6, 2024 and sell it today you would earn a total of  546.00  from holding Mfs New Discovery or generate 25.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Mfs New Discovery  vs.  Mfs Research International

 Performance 
       Timeline  
Mfs New Discovery 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Mfs New Discovery are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mfs New showed solid returns over the last few months and may actually be approaching a breakup point.
Mfs Research Interna 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mfs Research International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Mfs Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs New and Mfs Research Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mfs New and Mfs Research

The main advantage of trading using opposite Mfs New and Mfs Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs New position performs unexpectedly, Mfs Research 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 Research will offset losses from the drop in Mfs Research's long position.
The idea behind Mfs New Discovery and Mfs Research International 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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