Correlation Between Mfs Blended and Virtus Convertible

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

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

Diversification Opportunities for Mfs Blended and Virtus Convertible

-0.66

Correlation Coefficient

Mfs Blended  Virtus Convertible

Excellent diversification

The 3 months correlation between Mfs and Virtus is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Blended Research and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible and Mfs Blended 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 Blended Research are associated (or correlated) with Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Mfs Blended i.e., Mfs Blended and Virtus Convertible go up and down completely randomly.

Pair Corralation between Mfs Blended and Virtus Convertible

Assuming the 90 days horizon Mfs Blended Research is expected to under-perform the Virtus Convertible. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mfs Blended Research is 2.01 times less risky than Virtus Convertible. The mutual fund trades about -0.29 of its potential returns per unit of risk. The Virtus Convertible is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  3,644  in Virtus Convertible on October 11, 2024 and sell it today you would lose (83.00) from holding Virtus Convertible or give up 2.28% of portfolio value over 90 days.

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

Mfs Blended Research  vs.  Virtus Convertible

Mfs Blended Research

Risk-Adjusted Performance

0 of 100

Very Weak

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

Virtus Convertible

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Convertible are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Virtus Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mfs Blended and Virtus Convertible

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

The idea behind Mfs Blended Research and Virtus Convertible 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.