Correlation Between California Bond and Mfs Series

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

By analyzing existing cross correlation between California Bond Fund and Mfs Series Trust, you can compare the effects of market volatilities on California Bond and Mfs Series 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 California Bond with a short position of Mfs Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Mfs Series.

Diversification Opportunities for California Bond and Mfs Series

0.29

Correlation Coefficient

California Bond  Mfs Series

Modest diversification

The 3 months correlation between California and Mfs is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Mfs Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Series Trust and California Bond 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 California Bond Fund are associated (or correlated) with Mfs Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Series Trust has no effect on the direction of California Bond i.e., California Bond and Mfs Series go up and down completely randomly.

Pair Corralation between California Bond and Mfs Series

Assuming the 90 days horizon California Bond Fund is expected to under-perform the Mfs Series. But the mutual fund apears to be less risky and, when comparing its historical volatility, California Bond Fund is 2.75 times less risky than Mfs Series. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Mfs Series Trust is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,304  in Mfs Series Trust on December 29, 2024 and sell it today you would earn a total of  145.00  from holding Mfs Series Trust or generate 11.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

California Bond Fund  vs.  Mfs Series Trust

California Bond

Risk-Adjusted Performance

Very Weak

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

Mfs Series Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Series Trust are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Mfs Series may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with California Bond and Mfs Series

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

The idea behind California Bond Fund and Mfs Series Trust 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 CEOs Directory module to screen CEOs from public companies around the world.