Correlation Between Mfs Technology and Bridge Builder

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

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

Diversification Opportunities for Mfs Technology and Bridge Builder

0.11

Correlation Coefficient

Mfs Technology  Bridge Builder

Average diversification

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

Pair Corralation between Mfs Technology and Bridge Builder

Assuming the 90 days horizon Mfs Technology Fund is expected to generate 4.13 times more return on investment than Bridge Builder. However, Mfs Technology is 4.13 times more volatile than Bridge Builder Trust. It trades about 0.19 of its potential returns per unit of risk. Bridge Builder Trust is currently generating about 0.04 per unit of risk. If you would invest  4,769  in Mfs Technology Fund on September 13, 2024 and sell it today you would earn a total of  658.00  from holding Mfs Technology Fund or generate 13.8% return on investment over 90 days.

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

Mfs Technology Fund  vs.  Bridge Builder Trust

Mfs Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Technology Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Mfs Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Bridge Builder Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bridge Builder Trust are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Bridge Builder 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 Technology and Bridge Builder

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

The idea behind Mfs Technology Fund and Bridge Builder Trust 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.