Correlation Between Scharf Global and Mfs Lifetime

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

By analyzing existing cross correlation between Scharf Global Opportunity and Mfs Lifetime 2060, you can compare the effects of market volatilities on Scharf Global 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 Scharf Global with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Global and Mfs Lifetime.

Diversification Opportunities for Scharf Global and Mfs Lifetime

0.81

Correlation Coefficient

Scharf Global  Mfs Lifetime

Very poor diversification

The 3 months correlation between Scharf and Mfs is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and Mfs Lifetime 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2060 and Scharf Global 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 Scharf Global Opportunity 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 2060 has no effect on the direction of Scharf Global i.e., Scharf Global and Mfs Lifetime go up and down completely randomly.

Pair Corralation between Scharf Global and Mfs Lifetime

Assuming the 90 days horizon Scharf Global is expected to generate 1.59 times less return on investment than Mfs Lifetime. But when comparing it to its historical volatility, Scharf Global Opportunity is 1.1 times less risky than Mfs Lifetime. It trades about 0.04 of its potential returns per unit of risk. Mfs Lifetime 2060 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,353  in Mfs Lifetime 2060 on October 11, 2024 and sell it today you would earn a total of  276.00  from holding Mfs Lifetime 2060 or generate 20.4% return on investment over 90 days.

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

Scharf Global Opportunity  vs.  Mfs Lifetime 2060

Scharf Global Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mfs Lifetime 2060

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs Lifetime 2060 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Mfs Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Scharf Global and Mfs Lifetime

The main advantage of trading using opposite Scharf Global and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Global 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 Scharf Global Opportunity and Mfs Lifetime 2060 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.