Correlation Between MFS Investment and Aquagold International

Can any of the company-specific risk be diversified away by investing in both MFS Investment and Aquagold International 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 Investment and Aquagold International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MFS Investment Grade and Aquagold International, you can compare the effects of market volatilities on MFS Investment and Aquagold International 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 Investment with a short position of Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Aquagold International.

Diversification Opportunities for MFS Investment and Aquagold International

-0.54

Correlation Coefficient

MFS Investment  Aquagold International

Excellent diversification

The 3 months correlation between MFS and Aquagold is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International and MFS Investment 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 Investment Grade are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of MFS Investment i.e., MFS Investment and Aquagold International go up and down completely randomly.

Pair Corralation between MFS Investment and Aquagold International

Considering the 90-day investment horizon MFS Investment Grade is expected to generate 0.08 times more return on investment than Aquagold International. However, MFS Investment Grade is 12.47 times less risky than Aquagold International. It trades about 0.03 of its potential returns per unit of risk. Aquagold International is currently generating about -0.13 per unit of risk. If you would invest  785.00  in MFS Investment Grade on December 28, 2024 and sell it today you would earn a total of  6.00  from holding MFS Investment Grade or generate 0.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

MFS Investment Grade  vs.  Aquagold International

MFS Investment Grade

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Investment Grade are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, MFS Investment is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with MFS Investment and Aquagold International

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

The idea behind MFS Investment Grade and Aquagold International 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.