Correlation Between Nasdaq 100 and Mfs Mid

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Mfs Mid 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 and Mfs Mid 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 Mid Cap, you can compare the effects of market volatilities on Nasdaq 100 and Mfs Mid 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 with a short position of Mfs Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Mfs Mid.

Diversification Opportunities for Nasdaq 100 and Mfs Mid

0.66

Correlation Coefficient

Nasdaq 100  Mfs Mid

Poor diversification

The 3 months correlation between Nasdaq and Mfs is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Mfs Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Mid Cap and Nasdaq 100 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 Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Mid Cap has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Mfs Mid go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Mfs Mid

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.29 times more return on investment than Mfs Mid. However, Nasdaq 100 is 2.29 times more volatile than Mfs Mid Cap. It trades about 0.08 of its potential returns per unit of risk. Mfs Mid Cap is currently generating about 0.05 per unit of risk. If you would invest  18,684  in Nasdaq 100 2x Strategy on October 24, 2024 and sell it today you would earn a total of  21,869  from holding Nasdaq 100 2x Strategy or generate 117.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Nasdaq 100 2x Strategy  vs.  Mfs Mid Cap

Nasdaq 100 2x

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Nasdaq 100 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Mid Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Mid Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mfs Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq 100 and Mfs Mid

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

The idea behind Nasdaq 100 2x Strategy and Mfs Mid Cap 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.