Correlation Between Mfs Lifetime and Nuveen High

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

By analyzing existing cross correlation between Mfs Lifetime 2040 and Nuveen High Income, you can compare the effects of market volatilities on Mfs Lifetime and Nuveen High 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 Lifetime with a short position of Nuveen High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Lifetime and Nuveen High.

Diversification Opportunities for Mfs Lifetime and Nuveen High

0.8

Correlation Coefficient

Mfs Lifetime  Nuveen High

Very poor diversification

The 3 months correlation between Mfs and NUVEEN is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Lifetime 2040 and Nuveen High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen High Income and Mfs Lifetime 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 Lifetime 2040 are associated (or correlated) with Nuveen High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen High Income has no effect on the direction of Mfs Lifetime i.e., Mfs Lifetime and Nuveen High go up and down completely randomly.

Pair Corralation between Mfs Lifetime and Nuveen High

Assuming the 90 days horizon Mfs Lifetime 2040 is expected to generate 2.94 times more return on investment than Nuveen High. However, Mfs Lifetime is 2.94 times more volatile than Nuveen High Income. It trades about 0.16 of its potential returns per unit of risk. Nuveen High Income is currently generating about 0.27 per unit of risk. If you would invest  1,987  in Mfs Lifetime 2040 on September 4, 2024 and sell it today you would earn a total of  99.00  from holding Mfs Lifetime 2040 or generate 4.98% return on investment over 90 days.

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

Mfs Lifetime 2040  vs.  Nuveen High Income

Mfs Lifetime 2040

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Lifetime 2040 are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Mfs Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen High Income

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen High Income are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Nuveen High 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 Lifetime and Nuveen High

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

The idea behind Mfs Lifetime 2040 and Nuveen High Income 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.