Correlation Between Transamerica Large and Mfs Value
Can any of the company-specific risk be diversified away by investing in both Transamerica Large and Mfs Value 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 Transamerica Large and Mfs Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Large Cap and Mfs Value Fund, you can compare the effects of market volatilities on Transamerica Large and Mfs Value 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 Transamerica Large with a short position of Mfs Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Large and Mfs Value.
Diversification Opportunities for Transamerica Large and Mfs Value
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Transamerica and Mfs is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Large Cap and Mfs Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Value Fund and Transamerica Large 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 Transamerica Large Cap are associated (or correlated) with Mfs Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Value Fund has no effect on the direction of Transamerica Large i.e., Transamerica Large and Mfs Value go up and down completely randomly.
Pair Corralation between Transamerica Large and Mfs Value
Assuming the 90 days horizon Transamerica Large Cap is expected to generate 1.11 times more return on investment than Mfs Value. However, Transamerica Large is 1.11 times more volatile than Mfs Value Fund. It trades about 0.24 of its potential returns per unit of risk. Mfs Value Fund is currently generating about 0.2 per unit of risk. If you would invest 1,107 in Transamerica Large Cap on January 19, 2024 and sell it today you would earn a total of 238.00 from holding Transamerica Large Cap or generate 21.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Large Cap vs. Mfs Value Fund
Performance |
| Timeline |
| Transamerica Large Cap |
| Mfs Value Fund |
Transamerica Large and Mfs Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Large and Mfs Value
The main advantage of trading using opposite Transamerica Large and Mfs Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Large position performs unexpectedly, Mfs Value 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 Value will offset losses from the drop in Mfs Value's long position.| Transamerica Large vs. Dodge Cox Stock | Transamerica Large vs. American Funds American | Transamerica Large vs. American Funds American | Transamerica Large vs. American Mutual Fund |
| Mfs Value vs. Dodge Cox Stock | Mfs Value vs. American Funds American | Mfs Value vs. American Funds American | Mfs Value vs. American Mutual 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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