Correlation Between Mfs Lifetime and Mfs Income

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

Diversification Opportunities for Mfs Lifetime and Mfs Income

0.16

Correlation Coefficient

Mfs Lifetime  Mfs Income

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 Lifetime 2065 and Mfs Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Income Fund 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 Mfs Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Income Fund has no effect on the direction of Mfs Lifetime i.e., Mfs Lifetime and Mfs Income go up and down completely randomly.

Pair Corralation between Mfs Lifetime and Mfs Income

Assuming the 90 days horizon Mfs Lifetime is expected to generate 5.07 times less return on investment than Mfs Income. In addition to that, Mfs Lifetime is 2.48 times more volatile than Mfs Income Fund. It trades about 0.01 of its total potential returns per unit of risk. Mfs Income Fund is currently generating about 0.13 per unit of volatility. If you would invest  577.00  in Mfs Income Fund on December 19, 2024 and sell it today you would earn a total of  14.00  from holding Mfs Income Fund or generate 2.43% return on investment over 90 days.

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

Mfs Lifetime 2065  vs.  Mfs Income Fund

Mfs Lifetime 2065

Risk-Adjusted Performance

Very 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 primary indicators, Mfs Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Income Fund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Income Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mfs Income 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 Mfs Income

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

The idea behind Mfs Lifetime 2065 and Mfs Income Fund 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.