Correlation Between Mfs Technology and Voya Index

Can any of the company-specific risk be diversified away by investing in both Mfs Technology and Voya Index 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 Voya Index 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 Voya Index Plus, you can compare the effects of market volatilities on Mfs Technology and Voya Index 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 Voya Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Technology and Voya Index.

Diversification Opportunities for Mfs Technology and Voya Index

0.59

Correlation Coefficient

Mfs Technology  Voya Index

Very weak diversification

The 3 months correlation between Mfs and Voya is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Technology Fund and Voya Index Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Plus 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 Voya Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Plus has no effect on the direction of Mfs Technology i.e., Mfs Technology and Voya Index go up and down completely randomly.

Pair Corralation between Mfs Technology and Voya Index

Assuming the 90 days horizon Mfs Technology Fund is expected to generate 1.25 times more return on investment than Voya Index. However, Mfs Technology is 1.25 times more volatile than Voya Index Plus. It trades about 0.05 of its potential returns per unit of risk. Voya Index Plus is currently generating about 0.03 per unit of risk. If you would invest  3,170  in Mfs Technology Fund on October 15, 2024 and sell it today you would earn a total of  1,140  from holding Mfs Technology Fund or generate 35.96% return on investment over 90 days.

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

Mfs Technology Fund  vs.  Voya Index Plus

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 weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Voya Index Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Index Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Voya Index 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 Technology and Voya Index

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

The idea behind Mfs Technology Fund and Voya Index Plus 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.