Correlation Between Realty Income and Mfs Variable

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

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

Diversification Opportunities for Realty Income and Mfs Variable

0.31

Correlation Coefficient

Realty Income  Mfs Variable

Weak diversification

The 3 months correlation between Realty and Mfs is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Mfs Variable Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Variable Insurance and Realty Income 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 Realty Income are associated (or correlated) with Mfs Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Variable Insurance has no effect on the direction of Realty Income i.e., Realty Income and Mfs Variable go up and down completely randomly.

Pair Corralation between Realty Income and Mfs Variable

Taking into account the 90-day investment horizon Realty Income is expected to generate 0.61 times more return on investment than Mfs Variable. However, Realty Income is 1.63 times less risky than Mfs Variable. It trades about -0.14 of its potential returns per unit of risk. Mfs Variable Insurance is currently generating about -0.23 per unit of risk. If you would invest  5,651  in Realty Income on September 17, 2024 and sell it today you would lose (117.00) from holding Realty Income or give up 2.07% of portfolio value over 90 days.

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

Realty Income  vs.  Mfs Variable Insurance

Realty Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Realty Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Mfs Variable Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs Variable Insurance has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating 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 Realty Income and Mfs Variable

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

The idea behind Realty Income and Mfs Variable Insurance 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.