Correlation Between Royce Special and Mfs Managed

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

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

Diversification Opportunities for Royce Special and Mfs Managed

0.09

Correlation Coefficient

Royce Special  Mfs Managed

Significant diversification

The 3 months correlation between Royce and Mfs is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Royce Special Equity 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 Royce Special 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 Royce Special Equity 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 Royce Special i.e., Royce Special and Mfs Managed go up and down completely randomly.

Pair Corralation between Royce Special and Mfs Managed

Assuming the 90 days horizon Royce Special Equity is expected to generate 5.48 times more return on investment than Mfs Managed. However, Royce Special is 5.48 times more volatile than Mfs Managed Wealth. It trades about 0.05 of its potential returns per unit of risk. Mfs Managed Wealth is currently generating about 0.15 per unit of risk. If you would invest  1,568  in Royce Special Equity on September 12, 2024 and sell it today you would earn a total of  261.00  from holding Royce Special Equity or generate 16.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Royce Special Equity  vs.  Mfs Managed Wealth

Royce Special Equity

Risk-Adjusted Performance

11 of 100

Good

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

Mfs Managed Wealth

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Managed Wealth are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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 Royce Special and Mfs Managed

The main advantage of trading using opposite Royce Special and Mfs Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Special 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 Royce Special Equity 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.