Correlation Between Mfs Mid and Harbor Capital

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

By analyzing existing cross correlation between Mfs Mid Cap and Harbor Capital Appreciation, you can compare the effects of market volatilities on Mfs Mid and Harbor Capital 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 Mid with a short position of Harbor Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Mid and Harbor Capital.

Diversification Opportunities for Mfs Mid and Harbor Capital

0.94

Correlation Coefficient

Mfs Mid  Harbor Capital

Almost no diversification

The 3 months correlation between Mfs and Harbor is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Mid Cap and Harbor Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Capital Appre and Mfs Mid 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 Mid Cap are associated (or correlated) with Harbor Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Capital Appre has no effect on the direction of Mfs Mid i.e., Mfs Mid and Harbor Capital go up and down completely randomly.

Pair Corralation between Mfs Mid and Harbor Capital

Assuming the 90 days horizon Mfs Mid is expected to generate 2.15 times less return on investment than Harbor Capital. But when comparing it to its historical volatility, Mfs Mid Cap is 1.32 times less risky than Harbor Capital. It trades about 0.07 of its potential returns per unit of risk. Harbor Capital Appreciation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  6,685  in Harbor Capital Appreciation on September 4, 2024 and sell it today you would earn a total of  6,119  from holding Harbor Capital Appreciation or generate 91.53% return on investment over 90 days.

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

Mfs Mid Cap  vs.  Harbor Capital Appreciation

Mfs Mid Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Mid Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Mfs Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Harbor Capital Appre

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Mfs Mid and Harbor Capital

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

The idea behind Mfs Mid Cap and Harbor Capital Appreciation 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.