Correlation Between Nasdaq-100(r) and Mfs Blended

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Mfs Blended 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 Nasdaq-100(r) and Mfs Blended into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Mfs Blended Research, you can compare the effects of market volatilities on Nasdaq-100(r) and Mfs Blended 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 Nasdaq-100(r) with a short position of Mfs Blended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Mfs Blended.

Diversification Opportunities for Nasdaq-100(r) and Mfs Blended

0.94

Correlation Coefficient

Nasdaq-100(r)  Mfs Blended

Almost no diversification

The 3 months correlation between Nasdaq-100(r) and Mfs is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Mfs Blended Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Blended Research and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy are associated (or correlated) with Mfs Blended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Blended Research has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Mfs Blended go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Mfs Blended

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Mfs Blended. In addition to that, Nasdaq-100(r) is 2.24 times more volatile than Mfs Blended Research. It trades about -0.11 of its total potential returns per unit of risk. Mfs Blended Research is currently generating about -0.11 per unit of volatility. If you would invest  1,492  in Mfs Blended Research on December 23, 2024 and sell it today you would lose (118.00) from holding Mfs Blended Research or give up 7.91% of portfolio value over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Mfs Blended Research

Nasdaq 100 2x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq 100 2x Strategy 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 April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Mfs Blended Research

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Blended Research has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Nasdaq-100(r) and Mfs Blended

The main advantage of trading using opposite Nasdaq-100(r) and Mfs Blended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Mfs Blended 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 Blended will offset losses from the drop in Mfs Blended's long position.

The idea behind Nasdaq 100 2x Strategy and Mfs Blended Research 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.