Correlation Between MFS Active and EA Series

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

By analyzing existing cross correlation between MFS Active Exchange and EA Series Trust, you can compare the effects of market volatilities on MFS Active and EA Series 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 Active with a short position of EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Active and EA Series.

Diversification Opportunities for MFS Active and EA Series

-0.16

Correlation Coefficient

MFS Active  EA Series

Good diversification

The 3 months correlation between MFS and BUXX is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding MFS Active Exchange and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust and MFS Active 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 Active Exchange are associated (or correlated) with EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of MFS Active i.e., MFS Active and EA Series go up and down completely randomly.

Pair Corralation between MFS Active and EA Series

Given the investment horizon of 90 days MFS Active Exchange is expected to generate 5199.58 times more return on investment than EA Series. However, MFS Active is 5199.58 times more volatile than EA Series Trust. It trades about 0.38 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.22 per unit of risk. If you would invest  0.00  in MFS Active Exchange on September 14, 2024 and sell it today you would earn a total of  2,488  from holding MFS Active Exchange or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	11.11%
Values	Daily Returns

MFS Active Exchange  vs.  EA Series Trust

MFS Active Exchange

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Active Exchange are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, MFS Active sustained solid returns over the last few months and may actually be approaching a breakup point.

EA Series Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, EA Series is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MFS Active and EA Series

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

The idea behind MFS Active Exchange and EA Series Trust 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 Transaction History module to view history of all your transactions and understand their impact on performance.