Correlation Between Mfs Emerging and Mfs Lifetime

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

By analyzing existing cross correlation between Mfs Emerging Markets and Mfs Lifetime 2040, you can compare the effects of market volatilities on Mfs Emerging 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 Mfs Emerging with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Mfs Lifetime.

Diversification Opportunities for Mfs Emerging and Mfs Lifetime

0.59

Correlation Coefficient

Mfs Emerging  Mfs Lifetime

Very weak diversification

The 3 months correlation between Mfs and Mfs is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets and Mfs Lifetime 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2040 and Mfs Emerging 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 Emerging Markets 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 2040 has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Mfs Lifetime go up and down completely randomly.

Pair Corralation between Mfs Emerging and Mfs Lifetime

Assuming the 90 days horizon Mfs Emerging is expected to generate 5.26 times less return on investment than Mfs Lifetime. But when comparing it to its historical volatility, Mfs Emerging Markets is 1.38 times less risky than Mfs Lifetime. It trades about 0.01 of its potential returns per unit of risk. Mfs Lifetime 2040 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,875  in Mfs Lifetime 2040 on December 5, 2024 and sell it today you would earn a total of  71.00  from holding Mfs Lifetime 2040 or generate 3.79% return on investment over 90 days.

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

Mfs Emerging Markets  vs.  Mfs Lifetime 2040

Mfs Emerging Markets

Risk-Adjusted Performance

Very Weak

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

Mfs Lifetime 2040

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Lifetime 2040 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Mfs Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mfs Emerging and Mfs Lifetime

The main advantage of trading using opposite Mfs Emerging and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging 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 Mfs Emerging Markets and Mfs Lifetime 2040 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.