Correlation Between Mfs Modity and Americafirst Large

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

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

Diversification Opportunities for Mfs Modity and Americafirst Large

0.29

Correlation Coefficient

Mfs Modity  Americafirst Large

Modest diversification

The 3 months correlation between Mfs and Americafirst is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Modity Strategy and Americafirst Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Large Cap and Mfs Modity 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 Modity Strategy are associated (or correlated) with Americafirst Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Large Cap has no effect on the direction of Mfs Modity i.e., Mfs Modity and Americafirst Large go up and down completely randomly.

Pair Corralation between Mfs Modity and Americafirst Large

Assuming the 90 days horizon Mfs Modity is expected to generate 8.59 times less return on investment than Americafirst Large. But when comparing it to its historical volatility, Mfs Modity Strategy is 1.0 times less risky than Americafirst Large. It trades about 0.03 of its potential returns per unit of risk. Americafirst Large Cap is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,292  in Americafirst Large Cap on September 12, 2024 and sell it today you would earn a total of  156.00  from holding Americafirst Large Cap or generate 12.07% return on investment over 90 days.

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

Mfs Modity Strategy  vs.  Americafirst Large Cap

Mfs Modity Strategy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Modity Strategy are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mfs Modity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Americafirst Large Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Large Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Americafirst Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mfs Modity and Americafirst Large

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

The idea behind Mfs Modity Strategy and Americafirst Large 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.