Correlation Between Mfs Total and Mfs Research

Can any of the company-specific risk be diversified away by investing in both Mfs Total 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 Total 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 Total Return and Mfs Research International, you can compare the effects of market volatilities on Mfs Total 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 Total with a short position of Mfs Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Total and Mfs Research.

Diversification Opportunities for Mfs Total and Mfs Research

0.73

Correlation Coefficient

Mfs Total  Mfs Research

Poor diversification

The 3 months correlation between Mfs and Mfs is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Total Return 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 Total 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 Total Return 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 Total i.e., Mfs Total and Mfs Research go up and down completely randomly.

Pair Corralation between Mfs Total and Mfs Research

Assuming the 90 days horizon Mfs Total Return is expected to generate 0.45 times more return on investment than Mfs Research. However, Mfs Total Return is 2.21 times less risky than Mfs Research. It trades about 0.15 of its potential returns per unit of risk. Mfs Research International is currently generating about 0.06 per unit of risk. If you would invest  954.00  in Mfs Total Return on September 9, 2024 and sell it today you would earn a total of  8.00  from holding Mfs Total Return or generate 0.84% return on investment over 90 days.

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

Mfs Total Return  vs.  Mfs Research International

Mfs Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mfs Research Interna

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Mfs Total and Mfs Research

The main advantage of trading using opposite Mfs Total and Mfs Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Total 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 Total Return 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.