Correlation Between MFS Active and Ocean Park

Can any of the company-specific risk be diversified away by investing in both MFS Active and Ocean Park 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 Ocean Park 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 Ocean Park High, you can compare the effects of market volatilities on MFS Active and Ocean Park 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 Ocean Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Active and Ocean Park.

Diversification Opportunities for MFS Active and Ocean Park

-0.13

Correlation Coefficient

MFS Active  Ocean Park

Good diversification

The 3 months correlation between MFS and Ocean is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding MFS Active Exchange and Ocean Park High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Park High 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 Ocean Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Park High has no effect on the direction of MFS Active i.e., MFS Active and Ocean Park go up and down completely randomly.

Pair Corralation between MFS Active and Ocean Park

Given the investment horizon of 90 days MFS Active Exchange is expected to generate 1292.44 times more return on investment than Ocean Park. However, MFS Active is 1292.44 times more volatile than Ocean Park High. It trades about 0.29 of its potential returns per unit of risk. Ocean Park High is currently generating about -0.09 per unit of risk. If you would invest  0.00  in MFS Active Exchange on September 21, 2024 and sell it today you would earn a total of  2,454  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	27.91%
Values	Daily Returns

MFS Active Exchange  vs.  Ocean Park High

MFS Active Exchange

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Active Exchange are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, MFS Active sustained solid returns over the last few months and may actually be approaching a breakup point.

Ocean Park High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Park High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Ocean Park is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with MFS Active and Ocean Park

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

The idea behind MFS Active Exchange and Ocean Park High 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.