Correlation Between Upstart Holdings and MFS Intermediate

Can any of the company-specific risk be diversified away by investing in both Upstart Holdings and MFS Intermediate 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 Upstart Holdings and MFS Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Upstart Holdings and MFS Intermediate

-0.39

Correlation Coefficient

Upstart Holdings  MFS Intermediate

Very good diversification

The 3 months correlation between Upstart and MFS is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Upstart Holdings and MFS Intermediate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Intermediate Income and Upstart Holdings 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 Upstart Holdings are associated (or correlated) with MFS Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Intermediate Income has no effect on the direction of Upstart Holdings i.e., Upstart Holdings and MFS Intermediate go up and down completely randomly.

Pair Corralation between Upstart Holdings and MFS Intermediate

Given the investment horizon of 90 days Upstart Holdings is expected to generate 11.49 times more return on investment than MFS Intermediate. However, Upstart Holdings is 11.49 times more volatile than MFS Intermediate Income. It trades about 0.19 of its potential returns per unit of risk. MFS Intermediate Income is currently generating about 0.0 per unit of risk. If you would invest  3,609  in Upstart Holdings on September 12, 2024 and sell it today you would earn a total of  3,793  from holding Upstart Holdings or generate 105.1% return on investment over 90 days.

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

Upstart Holdings  vs.  MFS Intermediate Income

Upstart Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Upstart Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Upstart Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

MFS Intermediate Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS Intermediate Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, MFS Intermediate is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Upstart Holdings and MFS Intermediate

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

The idea behind Upstart Holdings and MFS Intermediate Income 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.