Correlation Between Mfs Value and American Mutual
Can any of the company-specific risk be diversified away by investing in both Mfs Value and American Mutual 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 Mfs Value and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Value Fund and American Mutual Fund, you can compare the effects of market volatilities on Mfs Value and American Mutual 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 Mfs Value with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Value and American Mutual.
Diversification Opportunities for Mfs Value and American Mutual
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mfs and American is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Value Fund and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Mfs Value 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 Mfs Value Fund are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Mfs Value i.e., Mfs Value and American Mutual go up and down completely randomly.
Pair Corralation between Mfs Value and American Mutual
Assuming the 90 days horizon Mfs Value Fund is expected to generate 1.01 times more return on investment than American Mutual. However, Mfs Value is 1.01 times more volatile than American Mutual Fund. It trades about -0.07 of its potential returns per unit of risk. American Mutual Fund is currently generating about -0.14 per unit of risk. If you would invest 4,960 in Mfs Value Fund on January 26, 2024 and sell it today you would lose (55.00) from holding Mfs Value Fund or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Value Fund vs. American Mutual Fund
Performance |
| Timeline |
| Mfs Value Fund |
| American Mutual |
Mfs Value and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Value and American Mutual
The main advantage of trading using opposite Mfs Value and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Value position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| Mfs Value vs. Edgewood Growth Fund | Mfs Value vs. Hartford Schroders Emerging | Mfs Value vs. HUMANA INC | Mfs Value vs. Aquagold International |
| American Mutual vs. Edgewood Growth Fund | American Mutual vs. Hartford Schroders Emerging | American Mutual vs. HUMANA INC | American Mutual vs. Aquagold International |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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