Correlation Between Mfs Variable and Sterling Capital

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

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

Diversification Opportunities for Mfs Variable and Sterling Capital

0.61

Correlation Coefficient

Mfs Variable  Sterling Capital

Poor diversification

The 3 months correlation between Mfs and Sterling is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Variable Insurance and Sterling Capital Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Mid and Mfs Variable 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 Variable Insurance are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Mid has no effect on the direction of Mfs Variable i.e., Mfs Variable and Sterling Capital go up and down completely randomly.

Pair Corralation between Mfs Variable and Sterling Capital

Assuming the 90 days horizon Mfs Variable Insurance is expected to under-perform the Sterling Capital. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mfs Variable Insurance is 1.52 times less risky than Sterling Capital. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Sterling Capital Mid is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,593  in Sterling Capital Mid on September 17, 2024 and sell it today you would lose (111.00) from holding Sterling Capital Mid or give up 6.97% of portfolio value over 90 days.

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

Mfs Variable Insurance  vs.  Sterling Capital Mid

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 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.

Sterling Capital Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Mid 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 Mfs Variable and Sterling Capital

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

The idea behind Mfs Variable Insurance and Sterling Capital Mid 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.