Correlation Between MFS Active and Vanguard Long

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

Diversification Opportunities for MFS Active and Vanguard Long

-0.15

Correlation Coefficient

MFS Active  Vanguard Long

Good diversification

The 3 months correlation between MFS and Vanguard is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding MFS Active Exchange and Vanguard Long Term Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Long Term 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 Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Long Term has no effect on the direction of MFS Active i.e., MFS Active and Vanguard Long go up and down completely randomly.

Pair Corralation between MFS Active and Vanguard Long

Given the investment horizon of 90 days MFS Active Exchange is expected to generate 254.87 times more return on investment than Vanguard Long. However, MFS Active is 254.87 times more volatile than Vanguard Long Term Treasury. It trades about 0.2 of its potential returns per unit of risk. Vanguard Long Term Treasury is currently generating about 0.01 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 Long Term Treasury

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 Long Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Long Term Treasury has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with MFS Active and Vanguard Long

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

The idea behind MFS Active Exchange and Vanguard Long 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.