Correlation Between Mfs Technology and Aegis Value

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

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

Diversification Opportunities for Mfs Technology and Aegis Value

0.52

Correlation Coefficient

Mfs Technology  Aegis Value

Very weak diversification

The 3 months correlation between Mfs and Aegis is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Technology Fund and Aegis Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegis Value Fund and Mfs Technology 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 Technology Fund are associated (or correlated) with Aegis Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegis Value Fund has no effect on the direction of Mfs Technology i.e., Mfs Technology and Aegis Value go up and down completely randomly.

Pair Corralation between Mfs Technology and Aegis Value

Assuming the 90 days horizon Mfs Technology Fund is expected to generate 2.15 times more return on investment than Aegis Value. However, Mfs Technology is 2.15 times more volatile than Aegis Value Fund. It trades about -0.14 of its potential returns per unit of risk. Aegis Value Fund is currently generating about -0.37 per unit of risk. If you would invest  5,165  in Mfs Technology Fund on September 25, 2024 and sell it today you would lose (692.00) from holding Mfs Technology Fund or give up 13.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Mfs Technology Fund  vs.  Aegis Value Fund

Mfs Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aegis Value Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegis Value Fund 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 essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Mfs Technology and Aegis Value

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

The idea behind Mfs Technology Fund and Aegis Value 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.