Correlation Between GDI Integrated and Mfs Diversified

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Can any of the company-specific risk be diversified away by investing in both GDI Integrated and Mfs Diversified 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 GDI Integrated and Mfs Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GDI Integrated and Mfs Diversified Income, you can compare the effects of market volatilities on GDI Integrated and Mfs Diversified 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 GDI Integrated with a short position of Mfs Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of GDI Integrated and Mfs Diversified.

Diversification Opportunities for GDI Integrated and Mfs Diversified

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between GDI and Mfs is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding GDI Integrated and MFS DIVERSIFIED INCOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Diversified Income and GDI Integrated 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 GDI Integrated are associated (or correlated) with Mfs Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Diversified Income has no effect on the direction of GDI Integrated i.e., GDI Integrated and Mfs Diversified go up and down completely randomly.

Pair Corralation between GDI Integrated and Mfs Diversified

Assuming the 90 days trading horizon GDI Integrated is expected to under-perform the Mfs Diversified. In addition to that, GDI Integrated is 3.46 times more volatile than Mfs Diversified Income. It trades about -0.03 of its total potential returns per unit of risk. Mfs Diversified Income is currently generating about 0.08 per unit of volatility. If you would invest  1,123  in Mfs Diversified Income on December 29, 2023 and sell it today you would earn a total of  85.00  from holding Mfs Diversified Income or generate 7.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

GDI Integrated  vs.  MFS DIVERSIFIED INCOME

 Performance 
       Timeline  
GDI Integrated 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in GDI Integrated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, GDI Integrated may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Mfs Diversified Income 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Diversified Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mfs Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GDI Integrated and Mfs Diversified Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GDI Integrated and Mfs Diversified

The main advantage of trading using opposite GDI Integrated and Mfs Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GDI Integrated position performs unexpectedly, Mfs Diversified 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 Diversified will offset losses from the drop in Mfs Diversified's long position.
The idea behind GDI Integrated and Mfs Diversified 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.
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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