Correlation Between Mfs Technology and Thrivent Small

Can any of the company-specific risk be diversified away by investing in both Mfs Technology and Thrivent Small 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 Thrivent Small 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 Thrivent Small Cap, you can compare the effects of market volatilities on Mfs Technology and Thrivent Small 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 Thrivent Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Technology and Thrivent Small.

Diversification Opportunities for Mfs Technology and Thrivent Small

0.89

Correlation Coefficient

Mfs Technology  Thrivent Small

Very poor diversification

The 3 months correlation between Mfs and Thrivent is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Technology Fund and Thrivent Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Small Cap 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 Thrivent Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Small Cap has no effect on the direction of Mfs Technology i.e., Mfs Technology and Thrivent Small go up and down completely randomly.

Pair Corralation between Mfs Technology and Thrivent Small

Assuming the 90 days horizon Mfs Technology Fund is expected to generate 1.14 times more return on investment than Thrivent Small. However, Mfs Technology is 1.14 times more volatile than Thrivent Small Cap. It trades about 0.11 of its potential returns per unit of risk. Thrivent Small Cap is currently generating about 0.07 per unit of risk. If you would invest  3,840  in Mfs Technology Fund on September 13, 2024 and sell it today you would earn a total of  1,587  from holding Mfs Technology Fund or generate 41.33% return on investment over 90 days.

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

Mfs Technology Fund  vs.  Thrivent Small Cap

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.

Thrivent Small Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Small Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Thrivent Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mfs Technology and Thrivent Small

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

The idea behind Mfs Technology Fund and Thrivent Small 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.