Correlation Between Mfs Global and Red Oak

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

By analyzing existing cross correlation between Mfs Global Alternative and Red Oak Technology, you can compare the effects of market volatilities on Mfs Global and Red Oak 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 Global with a short position of Red Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Global and Red Oak.

Diversification Opportunities for Mfs Global and Red Oak

-0.48

Correlation Coefficient

Mfs Global  Red Oak

Very good diversification

The 3 months correlation between Mfs and Red is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Global Alternative and Red Oak Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Oak Technology and Mfs Global 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 Global Alternative are associated (or correlated) with Red Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Oak Technology has no effect on the direction of Mfs Global i.e., Mfs Global and Red Oak go up and down completely randomly.

Pair Corralation between Mfs Global and Red Oak

Assuming the 90 days horizon Mfs Global Alternative is expected to generate 0.17 times more return on investment than Red Oak. However, Mfs Global Alternative is 6.04 times less risky than Red Oak. It trades about 0.27 of its potential returns per unit of risk. Red Oak Technology is currently generating about -0.13 per unit of risk. If you would invest  1,302  in Mfs Global Alternative on December 17, 2024 and sell it today you would earn a total of  58.00  from holding Mfs Global Alternative or generate 4.45% return on investment over 90 days.

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

Mfs Global Alternative  vs.  Red Oak Technology

Mfs Global Alternative

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Global Alternative are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mfs Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Red Oak Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Oak Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Mfs Global and Red Oak

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

The idea behind Mfs Global Alternative and Red Oak Technology 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.