Correlation Between MFS Active and Vanguard Intermediate

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

Diversification Opportunities for MFS Active and Vanguard Intermediate

-0.13

Correlation Coefficient

MFS Active  Vanguard Intermediate

Good diversification

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

Pair Corralation between MFS Active and Vanguard Intermediate

Given the investment horizon of 90 days MFS Active Exchange is expected to generate 727.62 times more return on investment than Vanguard Intermediate. However, MFS Active is 727.62 times more volatile than Vanguard Intermediate Term Treasury. It trades about 0.2 of its potential returns per unit of risk. Vanguard Intermediate Term Treasury is currently generating about 0.07 per unit of risk. If you would invest  0.00  in MFS Active Exchange on October 12, 2024 and sell it today you would earn a total of  2,440  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	13.3%
Values	Daily Returns

MFS Active Exchange  vs.  Vanguard Intermediate Term Tre

MFS Active Exchange

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Active Exchange are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, MFS Active sustained solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Intermediate Term Treasury has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Vanguard Intermediate is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MFS Active and Vanguard Intermediate

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

The idea behind MFS Active Exchange and Vanguard Intermediate Term Treasury 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.