Correlation Between Mfs Core and Mfs Mid

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

By analyzing existing cross correlation between Mfs E Equity and Mfs Mid Cap, you can compare the effects of market volatilities on Mfs Core and Mfs Mid 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 Core with a short position of Mfs Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Core and Mfs Mid.

Diversification Opportunities for Mfs Core and Mfs Mid

0.8

Correlation Coefficient

Mfs Core  Mfs Mid

Very poor diversification

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

Pair Corralation between Mfs Core and Mfs Mid

Assuming the 90 days horizon Mfs E Equity is expected to generate 0.9 times more return on investment than Mfs Mid. However, Mfs E Equity is 1.11 times less risky than Mfs Mid. It trades about 0.01 of its potential returns per unit of risk. Mfs Mid Cap is currently generating about -0.06 per unit of risk. If you would invest  5,019  in Mfs E Equity on December 5, 2024 and sell it today you would earn a total of  13.00  from holding Mfs E Equity or generate 0.26% return on investment over 90 days.

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

Mfs E Equity  vs.  Mfs Mid Cap

Mfs E Equity

Risk-Adjusted Performance

Very Weak

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

Mfs Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Mfs Core and Mfs Mid

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

The idea behind Mfs E Equity and Mfs Mid Cap 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.