Correlation Between Mfs Technology and Spirit Of

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

Diversification Opportunities for Mfs Technology and Spirit Of

0.1

Correlation Coefficient

Mfs Technology  Spirit Of

Average diversification

The 3 months correlation between Mfs and Spirit is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Technology Fund and Spirit Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Of America 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 Spirit Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Of America has no effect on the direction of Mfs Technology i.e., Mfs Technology and Spirit Of go up and down completely randomly.

Pair Corralation between Mfs Technology and Spirit Of

Assuming the 90 days horizon Mfs Technology Fund is expected to under-perform the Spirit Of. In addition to that, Mfs Technology is 2.44 times more volatile than Spirit Of America. It trades about -0.05 of its total potential returns per unit of risk. Spirit Of America is currently generating about 0.18 per unit of volatility. If you would invest  1,133  in Spirit Of America on October 26, 2024 and sell it today you would earn a total of  136.00  from holding Spirit Of America or generate 12.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Mfs Technology Fund  vs.  Spirit Of America

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.

Spirit Of America

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spirit Of America are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Spirit Of may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mfs Technology and Spirit Of

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

The idea behind Mfs Technology Fund and Spirit Of America 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.