Correlation Between Mfs Growth and Mfs Core

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

By analyzing existing cross correlation between Mfs Growth Fund and Mfs E Equity, you can compare the effects of market volatilities on Mfs Growth and Mfs Core 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 Growth with a short position of Mfs Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Growth and Mfs Core.

Diversification Opportunities for Mfs Growth and Mfs Core

0.9

Correlation Coefficient

Mfs Growth  Mfs Core

Almost no diversification

The 3 months correlation between Mfs and MFS is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Growth Fund and Mfs E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs E Equity and Mfs Growth 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 Growth Fund are associated (or correlated) with Mfs Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs E Equity has no effect on the direction of Mfs Growth i.e., Mfs Growth and Mfs Core go up and down completely randomly.

Pair Corralation between Mfs Growth and Mfs Core

Assuming the 90 days horizon Mfs Growth Fund is expected to under-perform the Mfs Core. In addition to that, Mfs Growth is 1.42 times more volatile than Mfs E Equity. It trades about -0.09 of its total potential returns per unit of risk. Mfs E Equity is currently generating about -0.06 per unit of volatility. If you would invest  5,115  in Mfs E Equity on December 27, 2024 and sell it today you would lose (189.00) from holding Mfs E Equity or give up 3.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Mfs Growth Fund  vs.  Mfs E Equity

Mfs Growth Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Growth Fund 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.

Mfs E Equity

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Mfs Growth Fund and Mfs E Equity 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.