Correlation Between Mfs Prudent and Mfs Lifetime

Can any of the company-specific risk be diversified away by investing in both Mfs Prudent 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 Prudent 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 Prudent Investor and Mfs Lifetime 2040, you can compare the effects of market volatilities on Mfs Prudent 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 Prudent with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Prudent and Mfs Lifetime.

Diversification Opportunities for Mfs Prudent and Mfs Lifetime

0.16

Correlation Coefficient

Mfs Prudent  Mfs Lifetime

Average diversification

The 3 months correlation between Mfs and Mfs is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Prudent Investor 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 Prudent 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 Prudent Investor 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 Prudent i.e., Mfs Prudent and Mfs Lifetime go up and down completely randomly.

Pair Corralation between Mfs Prudent and Mfs Lifetime

Assuming the 90 days horizon Mfs Prudent is expected to generate 1.49 times less return on investment than Mfs Lifetime. But when comparing it to its historical volatility, Mfs Prudent Investor is 1.47 times less risky than Mfs Lifetime. It trades about 0.1 of its potential returns per unit of risk. Mfs Lifetime 2040 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,558  in Mfs Lifetime 2040 on September 17, 2024 and sell it today you would earn a total of  521.00  from holding Mfs Lifetime 2040 or generate 33.44% return on investment over 90 days.

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

Mfs Prudent Investor  vs.  Mfs Lifetime 2040

Mfs Prudent Investor

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Mfs Prudent Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Mfs Prudent 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

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Lifetime 2040 are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. 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 Prudent and Mfs Lifetime

The main advantage of trading using opposite Mfs Prudent and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Prudent 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 Prudent Investor 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.