Correlation Between Mfs Institutional and Mfs Growth

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

By analyzing existing cross correlation between Mfs Institutional International and Mfs Growth Fund, you can compare the effects of market volatilities on Mfs Institutional and Mfs Growth 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 Institutional with a short position of Mfs Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Institutional and Mfs Growth.

Diversification Opportunities for Mfs Institutional and Mfs Growth

0.29

Correlation Coefficient

Mfs Institutional  Mfs Growth

Modest diversification

The 3 months correlation between Mfs and Mfs is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Institutional Internationa and Mfs Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Growth Fund and Mfs Institutional 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 Institutional International are associated (or correlated) with Mfs Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Growth Fund has no effect on the direction of Mfs Institutional i.e., Mfs Institutional and Mfs Growth go up and down completely randomly.

Pair Corralation between Mfs Institutional and Mfs Growth

Assuming the 90 days horizon Mfs Institutional International is expected to generate 0.26 times more return on investment than Mfs Growth. However, Mfs Institutional International is 3.83 times less risky than Mfs Growth. It trades about -0.33 of its potential returns per unit of risk. Mfs Growth Fund is currently generating about -0.2 per unit of risk. If you would invest  3,586  in Mfs Institutional International on October 10, 2024 and sell it today you would lose (172.00) from holding Mfs Institutional International or give up 4.8% of portfolio value over 90 days.

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

Mfs Institutional Internationa  vs.  Mfs Growth Fund

Mfs Institutional

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs Institutional International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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 indicators, Mfs Growth 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 Institutional and Mfs Growth

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

The idea behind Mfs Institutional International and Mfs Growth Fund 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.