Correlation Between Victory Strategic and Mfs Utilities

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

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

Diversification Opportunities for Victory Strategic and Mfs Utilities

0.53

Correlation Coefficient

Victory Strategic  Mfs Utilities

Very weak diversification

The 3 months correlation between Victory and Mfs is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Victory Strategic Allocation and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities and Victory Strategic 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 Victory Strategic Allocation are associated (or correlated) with Mfs Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Victory Strategic i.e., Victory Strategic and Mfs Utilities go up and down completely randomly.

Pair Corralation between Victory Strategic and Mfs Utilities

Assuming the 90 days horizon Victory Strategic Allocation is expected to under-perform the Mfs Utilities. But the mutual fund apears to be less risky and, when comparing its historical volatility, Victory Strategic Allocation is 1.89 times less risky than Mfs Utilities. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Mfs Utilities Fund is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,238  in Mfs Utilities Fund on December 29, 2024 and sell it today you would earn a total of  2.00  from holding Mfs Utilities Fund or generate 0.09% return on investment over 90 days.

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

Victory Strategic Allocation  vs.  Mfs Utilities Fund

Victory Strategic

Risk-Adjusted Performance

Very Weak

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

Mfs Utilities

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Victory Strategic and Mfs Utilities

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

The idea behind Victory Strategic Allocation and Mfs Utilities Fund 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 CEOs Directory module to screen CEOs from public companies around the world.