Correlation Between Us High and Mfs Growth

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

By analyzing existing cross correlation between Us High Relative and Mfs Growth Fund, you can compare the effects of market volatilities on Us High and Mfs Growth 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 Us High with a short position of Mfs Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us High and Mfs Growth.

Diversification Opportunities for Us High and Mfs Growth

0.8

Correlation Coefficient

Us High  Mfs Growth

Very poor diversification

The 3 months correlation between DURPX and Mfs is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Us High Relative and Mfs Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Growth Fund and Us High 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 Us High Relative are associated (or correlated) with Mfs Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Growth Fund has no effect on the direction of Us High i.e., Us High and Mfs Growth go up and down completely randomly.

Pair Corralation between Us High and Mfs Growth

Assuming the 90 days horizon Us High Relative is expected to generate 0.63 times more return on investment than Mfs Growth. However, Us High Relative is 1.58 times less risky than Mfs Growth. It trades about -0.04 of its potential returns per unit of risk. Mfs Growth Fund is currently generating about -0.09 per unit of risk. If you would invest  2,477  in Us High Relative on December 27, 2024 and sell it today you would lose (59.00) from holding Us High Relative or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Us High Relative  vs.  Mfs Growth Fund

Us High Relative

Risk-Adjusted Performance

Very Weak

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

Mfs Growth Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Us High and Mfs Growth

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

The idea behind Us High Relative and Mfs Growth 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.