Correlation Between Fundamental Large and Mfs Conservative

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

By analyzing existing cross correlation between Fundamental Large Cap and Mfs Servative Allocation, you can compare the effects of market volatilities on Fundamental Large and Mfs Conservative 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 Fundamental Large with a short position of Mfs Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Large and Mfs Conservative.

Diversification Opportunities for Fundamental Large and Mfs Conservative

0.78

Correlation Coefficient

Fundamental Large  Mfs Conservative

Poor diversification

The 3 months correlation between Fundamental and Mfs is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Large Cap and Mfs Servative Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Servative Allocation and Fundamental Large 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 Fundamental Large Cap are associated (or correlated) with Mfs Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Servative Allocation has no effect on the direction of Fundamental Large i.e., Fundamental Large and Mfs Conservative go up and down completely randomly.

Pair Corralation between Fundamental Large and Mfs Conservative

Assuming the 90 days horizon Fundamental Large Cap is expected to under-perform the Mfs Conservative. In addition to that, Fundamental Large is 1.71 times more volatile than Mfs Servative Allocation. It trades about -0.08 of its total potential returns per unit of risk. Mfs Servative Allocation is currently generating about -0.07 per unit of volatility. If you would invest  1,620  in Mfs Servative Allocation on December 20, 2024 and sell it today you would lose (41.00) from holding Mfs Servative Allocation or give up 2.53% of portfolio value over 90 days.

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

Fundamental Large Cap  vs.  Mfs Servative Allocation

Fundamental Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundamental Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fundamental Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Servative Allocation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Servative Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Mfs Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fundamental Large and Mfs Conservative

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

The idea behind Fundamental Large Cap and Mfs Servative Allocation 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.