Correlation Between Multisector Bond and Mfs Variable

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Can any of the company-specific risk be diversified away by investing in both Multisector Bond and Mfs Variable 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 Multisector Bond and Mfs Variable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Mfs Variable Insurance, you can compare the effects of market volatilities on Multisector Bond and Mfs Variable 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 Multisector Bond with a short position of Mfs Variable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Mfs Variable.

Diversification Opportunities for Multisector Bond and Mfs Variable

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Multisector and Mfs is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Mfs Variable Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Variable Insurance and Multisector Bond 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 Multisector Bond Sma are associated (or correlated) with Mfs Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Variable Insurance has no effect on the direction of Multisector Bond i.e., Multisector Bond and Mfs Variable go up and down completely randomly.

Pair Corralation between Multisector Bond and Mfs Variable

Assuming the 90 days horizon Multisector Bond Sma is expected to generate 0.42 times more return on investment than Mfs Variable. However, Multisector Bond Sma is 2.38 times less risky than Mfs Variable. It trades about 0.09 of its potential returns per unit of risk. Mfs Variable Insurance is currently generating about 0.02 per unit of risk. If you would invest  1,102  in Multisector Bond Sma on September 19, 2024 and sell it today you would earn a total of  263.00  from holding Multisector Bond Sma or generate 23.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Multisector Bond Sma  vs.  Mfs Variable Insurance

 Performance 
       Timeline  
Multisector Bond Sma 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mfs Variable Insurance has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Multisector Bond and Mfs Variable Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Multisector Bond and Mfs Variable

The main advantage of trading using opposite Multisector Bond and Mfs Variable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond position performs unexpectedly, Mfs Variable 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 Variable will offset losses from the drop in Mfs Variable's long position.
The idea behind Multisector Bond Sma and Mfs Variable Insurance 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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