Correlation Between Microsoft and Mfs Blended
Can any of the company-specific risk be diversified away by investing in both Microsoft and Mfs Blended 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 Microsoft and Mfs Blended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Mfs Blended Research, you can compare the effects of market volatilities on Microsoft and Mfs Blended 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 Microsoft with a short position of Mfs Blended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Mfs Blended.
Diversification Opportunities for Microsoft and Mfs Blended
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Microsoft and Mfs is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Mfs Blended Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Blended Research and Microsoft 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 Microsoft are associated (or correlated) with Mfs Blended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Blended Research has no effect on the direction of Microsoft i.e., Microsoft and Mfs Blended go up and down completely randomly.
Pair Corralation between Microsoft and Mfs Blended
Given the investment horizon of 90 days Microsoft is expected to generate 1.87 times more return on investment than Mfs Blended. However, Microsoft is 1.87 times more volatile than Mfs Blended Research. It trades about 0.06 of its potential returns per unit of risk. Mfs Blended Research is currently generating about 0.01 per unit of risk. If you would invest 27,259 in Microsoft on January 19, 2024 and sell it today you would earn a total of 13,925 from holding Microsoft or generate 51.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Mfs Blended Research
Performance |
| Timeline |
| Microsoft |
| Mfs Blended Research |
Microsoft and Mfs Blended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Mfs Blended
The main advantage of trading using opposite Microsoft and Mfs Blended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Mfs Blended 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 Blended will offset losses from the drop in Mfs Blended's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Mfs Blended vs. Vanguard Emerging Markets | Mfs Blended vs. American Funds New | Mfs Blended vs. American Funds New | Mfs Blended vs. New World Fund |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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