Correlation Between Micron Technology and Mfs Managed

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

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

Diversification Opportunities for Micron Technology and Mfs Managed

0.45

Correlation Coefficient

Micron Technology  Mfs Managed

Very weak diversification

The 3 months correlation between Micron and Mfs is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Mfs Managed Wealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Managed Wealth and Micron 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 Micron Technology are associated (or correlated) with Mfs Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Managed Wealth has no effect on the direction of Micron Technology i.e., Micron Technology and Mfs Managed go up and down completely randomly.

Pair Corralation between Micron Technology and Mfs Managed

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Mfs Managed. In addition to that, Micron Technology is 14.05 times more volatile than Mfs Managed Wealth. It trades about -0.07 of its total potential returns per unit of risk. Mfs Managed Wealth is currently generating about -0.1 per unit of volatility. If you would invest  1,277  in Mfs Managed Wealth on September 13, 2024 and sell it today you would lose (11.00) from holding Mfs Managed Wealth or give up 0.86% of portfolio value over 90 days.

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

Micron Technology  vs.  Mfs Managed Wealth

Micron Technology

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mfs Managed Wealth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Micron Technology and Mfs Managed

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

The idea behind Micron Technology and Mfs Managed Wealth 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.