Correlation Between Intact Financial and Mfs Diversified

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

Diversification Opportunities for Intact Financial and Mfs Diversified

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Intact and Mfs is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial 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 Intact Financial 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 Intact Financial 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 Intact Financial i.e., Intact Financial and Mfs Diversified go up and down completely randomly.

Pair Corralation between Intact Financial and Mfs Diversified

Assuming the 90 days trading horizon Intact Financial is expected to generate 2.15 times more return on investment than Mfs Diversified. However, Intact Financial is 2.15 times more volatile than Mfs Diversified Income. It trades about 0.04 of its potential returns per unit of risk. Mfs Diversified Income is currently generating about 0.0 per unit of risk. If you would invest  17,888  in Intact Financial on December 29, 2023 and sell it today you would earn a total of  4,161  from holding Intact Financial or generate 23.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Intact Financial  vs.  MFS DIVERSIFIED INCOME

 Performance 
       Timeline  
Intact Financial 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Intact Financial 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
Weak
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 fundamental indicators, Mfs Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Intact Financial and Mfs Diversified Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intact Financial and Mfs Diversified

The main advantage of trading using opposite Intact Financial and Mfs Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial 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 Intact Financial 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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