Correlation Between Aam/himco Short and Mfs Value

Can any of the company-specific risk be diversified away by investing in both Aam/himco Short and Mfs Value 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 Aam/himco Short and Mfs Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aamhimco Short Duration and Mfs Value Fund, you can compare the effects of market volatilities on Aam/himco Short and Mfs Value 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 Aam/himco Short with a short position of Mfs Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam/himco Short and Mfs Value.

Diversification Opportunities for Aam/himco Short and Mfs Value

0.26

Correlation Coefficient

Aam/himco Short  Mfs Value

Modest diversification

The 3 months correlation between Aam/himco and Mfs is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aamhimco Short Duration and Mfs Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Value Fund and Aam/himco Short 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 Aamhimco Short Duration are associated (or correlated) with Mfs Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Value Fund has no effect on the direction of Aam/himco Short i.e., Aam/himco Short and Mfs Value go up and down completely randomly.

Pair Corralation between Aam/himco Short and Mfs Value

Assuming the 90 days horizon Aam/himco Short is expected to generate 1.26 times less return on investment than Mfs Value. But when comparing it to its historical volatility, Aamhimco Short Duration is 9.03 times less risky than Mfs Value. It trades about 0.24 of its potential returns per unit of risk. Mfs Value Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,324  in Mfs Value Fund on October 10, 2024 and sell it today you would earn a total of  508.00  from holding Mfs Value Fund or generate 11.75% return on investment over 90 days.

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

Aamhimco Short Duration  vs.  Mfs Value Fund

Aamhimco Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aamhimco Short Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Aam/himco Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Value Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Aam/himco Short and Mfs Value

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

The idea behind Aamhimco Short Duration and Mfs Value Fund 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.