Correlation Between Visa and Mfs Lifetime

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

By analyzing existing cross correlation between Visa Class A and Mfs Lifetime 2035, you can compare the effects of market volatilities on Visa and Mfs Lifetime 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 Visa with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Mfs Lifetime.

Diversification Opportunities for Visa and Mfs Lifetime

0.04

Correlation Coefficient

Visa  Mfs Lifetime

Significant diversification

The 3 months correlation between Visa and Mfs is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Mfs Lifetime 2035 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2035 and Visa 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 Visa Class A are associated (or correlated) with Mfs Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Lifetime 2035 has no effect on the direction of Visa i.e., Visa and Mfs Lifetime go up and down completely randomly.

Pair Corralation between Visa and Mfs Lifetime

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.76 times more return on investment than Mfs Lifetime. However, Visa Class A is 1.31 times less risky than Mfs Lifetime. It trades about 0.04 of its potential returns per unit of risk. Mfs Lifetime 2035 is currently generating about -0.31 per unit of risk. If you would invest  31,665  in Visa Class A on October 1, 2024 and sell it today you would earn a total of  201.00  from holding Visa Class A or generate 0.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Visa Class A  vs.  Mfs Lifetime 2035

Visa Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Mfs Lifetime 2035

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs Lifetime 2035 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals 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 Visa and Mfs Lifetime

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

The idea behind Visa Class A and Mfs Lifetime 2035 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.