Correlation Between Columbia Real and Mfs Lifetime

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

By analyzing existing cross correlation between Columbia Real Estate and Mfs Lifetime 2035, you can compare the effects of market volatilities on Columbia Real and Mfs Lifetime 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 Columbia Real with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Real and Mfs Lifetime.

Diversification Opportunities for Columbia Real and Mfs Lifetime

0.69

Correlation Coefficient

Columbia Real  Mfs Lifetime

Poor diversification

The 3 months correlation between Columbia and Mfs is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Real Estate and Mfs Lifetime 2035 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2035 and Columbia Real 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 Columbia Real Estate are associated (or correlated) with Mfs Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Lifetime 2035 has no effect on the direction of Columbia Real i.e., Columbia Real and Mfs Lifetime go up and down completely randomly.

Pair Corralation between Columbia Real and Mfs Lifetime

Assuming the 90 days horizon Columbia Real Estate is expected to generate 1.77 times more return on investment than Mfs Lifetime. However, Columbia Real is 1.77 times more volatile than Mfs Lifetime 2035. It trades about 0.04 of its potential returns per unit of risk. Mfs Lifetime 2035 is currently generating about 0.05 per unit of risk. If you would invest  846.00  in Columbia Real Estate on October 3, 2024 and sell it today you would earn a total of  154.00  from holding Columbia Real Estate or generate 18.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.75%
Values	Daily Returns

Columbia Real Estate  vs.  Mfs Lifetime 2035

Columbia Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mfs Lifetime 2035

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs Lifetime 2035 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals 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 Columbia Real and Mfs Lifetime

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

The idea behind Columbia Real Estate and Mfs Lifetime 2035 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.