Correlation Between Mfs Lifetime and Touchstone Small

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

By analyzing existing cross correlation between Mfs Lifetime 2065 and Touchstone Small Cap, you can compare the effects of market volatilities on Mfs Lifetime and Touchstone Small 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 Lifetime with a short position of Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Lifetime and Touchstone Small.

Diversification Opportunities for Mfs Lifetime and Touchstone Small

0.68

Correlation Coefficient

Mfs Lifetime  Touchstone Small

Poor diversification

The 3 months correlation between Mfs and Touchstone is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Lifetime 2065 and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap and Mfs Lifetime 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 Lifetime 2065 are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Mfs Lifetime i.e., Mfs Lifetime and Touchstone Small go up and down completely randomly.

Pair Corralation between Mfs Lifetime and Touchstone Small

Assuming the 90 days horizon Mfs Lifetime 2065 is expected to generate 0.7 times more return on investment than Touchstone Small. However, Mfs Lifetime 2065 is 1.43 times less risky than Touchstone Small. It trades about -0.01 of its potential returns per unit of risk. Touchstone Small Cap is currently generating about -0.07 per unit of risk. If you would invest  987.00  in Mfs Lifetime 2065 on December 29, 2024 and sell it today you would lose (4.00) from holding Mfs Lifetime 2065 or give up 0.41% of portfolio value over 90 days.

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

Mfs Lifetime 2065  vs.  Touchstone Small Cap

Mfs Lifetime 2065

Risk-Adjusted Performance

Weak

Over the last 90 days Mfs Lifetime 2065 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Mfs Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Touchstone Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Touchstone Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Touchstone Small 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 Lifetime and Touchstone Small

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

The idea behind Mfs Lifetime 2065 and Touchstone Small Cap 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.