Correlation Between Mfs Union and Mfs Growth

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

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

Diversification Opportunities for Mfs Union and Mfs Growth

-0.13

Correlation Coefficient

Mfs Union  Mfs Growth

Good diversification

The 3 months correlation between Mfs and Mfs is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Union Standard and Mfs Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Growth Fund and Mfs Union 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 Union Standard are associated (or correlated) with Mfs Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Growth Fund has no effect on the direction of Mfs Union i.e., Mfs Union and Mfs Growth go up and down completely randomly.

Pair Corralation between Mfs Union and Mfs Growth

Assuming the 90 days horizon Mfs Union Standard is expected to generate 0.77 times more return on investment than Mfs Growth. However, Mfs Union Standard is 1.3 times less risky than Mfs Growth. It trades about -0.23 of its potential returns per unit of risk. Mfs Growth Fund is currently generating about -0.21 per unit of risk. If you would invest  3,780  in Mfs Union Standard on October 11, 2024 and sell it today you would lose (406.00) from holding Mfs Union Standard or give up 10.74% of portfolio value over 90 days.

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

Mfs Union Standard  vs.  Mfs Growth Fund

Mfs Union Standard

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mfs Growth Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mfs Union and Mfs Growth

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

The idea behind Mfs Union Standard and Mfs Growth 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 Transaction History module to view history of all your transactions and understand their impact on performance.