Correlation Between Cardinal Small and Mfs Prudent

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

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

Diversification Opportunities for Cardinal Small and Mfs Prudent

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Correlation Coefficient

Cardinal Small  Mfs Prudent

Pay attention - limited upside

The 3 months correlation between Cardinal and Mfs is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Small Cap and Mfs Prudent Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Prudent Investor and Cardinal Small 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 Cardinal Small Cap are associated (or correlated) with Mfs Prudent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Prudent Investor has no effect on the direction of Cardinal Small i.e., Cardinal Small and Mfs Prudent go up and down completely randomly.

Pair Corralation between Cardinal Small and Mfs Prudent

Assuming the 90 days horizon Cardinal Small Cap is expected to generate 1.78 times more return on investment than Mfs Prudent. However, Cardinal Small is 1.78 times more volatile than Mfs Prudent Investor. It trades about 0.05 of its potential returns per unit of risk. Mfs Prudent Investor is currently generating about -0.02 per unit of risk. If you would invest  1,375  in Cardinal Small Cap on October 4, 2024 and sell it today you would earn a total of  69.00  from holding Cardinal Small Cap or generate 5.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cardinal Small Cap  vs.  Mfs Prudent Investor

Cardinal Small Cap

Risk-Adjusted Performance

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Very Weak

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

Mfs Prudent Investor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cardinal Small and Mfs Prudent

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

The idea behind Cardinal Small Cap and Mfs Prudent Investor 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..