Correlation Between Mfs Growth and American Funds

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

Diversification Opportunities for Mfs Growth and American Funds

0.93

Correlation Coefficient

Mfs Growth  American Funds

Almost no diversification

The 3 months correlation between Mfs and American is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Growth Fund and American Funds The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds has no effect on the direction of Mfs Growth i.e., Mfs Growth and American Funds go up and down completely randomly.

Pair Corralation between Mfs Growth and American Funds

Assuming the 90 days horizon Mfs Growth is expected to generate 1.05 times less return on investment than American Funds. In addition to that, Mfs Growth is 1.08 times more volatile than American Funds The. It trades about 0.06 of its total potential returns per unit of risk. American Funds The is currently generating about 0.07 per unit of volatility. If you would invest  6,304  in American Funds The on October 7, 2024 and sell it today you would earn a total of  1,253  from holding American Funds The or generate 19.88% return on investment over 90 days.

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

Mfs Growth Fund  vs.  American Funds The

Mfs Growth Fund

Risk-Adjusted Performance

0 of 100

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 fairly strong forward-looking signals, Mfs Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Funds The has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, American Funds 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 American Funds

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

The idea behind Mfs Growth Fund and American Funds The 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.

Check out your portfolio center.

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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.