Correlation Between American Funds and Mfs Aggressive

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

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

Diversification Opportunities for American Funds and Mfs Aggressive

0.84

Correlation Coefficient

American Funds  Mfs Aggressive

Very poor diversification

The 3 months correlation between American and Mfs is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Growth and Mfs Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Aggressive Growth and American Funds 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 American Funds Growth are associated (or correlated) with Mfs Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Aggressive Growth has no effect on the direction of American Funds i.e., American Funds and Mfs Aggressive go up and down completely randomly.

Pair Corralation between American Funds and Mfs Aggressive

Assuming the 90 days horizon American Funds Growth is expected to under-perform the Mfs Aggressive. In addition to that, American Funds is 1.44 times more volatile than Mfs Aggressive Growth. It trades about -0.07 of its total potential returns per unit of risk. Mfs Aggressive Growth is currently generating about 0.0 per unit of volatility. If you would invest  2,942  in Mfs Aggressive Growth on December 29, 2024 and sell it today you would lose (10.00) from holding Mfs Aggressive Growth or give up 0.34% of portfolio value over 90 days.

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

American Funds Growth  vs.  Mfs Aggressive Growth

American Funds Growth

Risk-Adjusted Performance

Very Weak

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

Mfs Aggressive Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with American Funds and Mfs Aggressive

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

The idea behind American Funds Growth and Mfs Aggressive Growth 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.