Correlation Between American Mutual and MFS Series

By analyzing existing cross correlation between American Mutual and MFS Series Trust, you can compare the effects of market volatilities on American Mutual and MFS Series 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 American Mutual with a short position of MFS Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and MFS Series.

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Can any of the company-specific risk be diversified away by investing in both American Mutual and MFS Series 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 American Mutual and MFS Series into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for American Mutual and MFS Series

0.98
  Correlation Coefficient
American Mutual
MFS Series Trust

Almost no diversification

The 3 months correlation between American and MFEBX is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual and MFS Series Trust in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on MFS Series Trust and American Mutual 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 American Mutual are associated (or correlated) with MFS Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Series Trust has no effect on the direction of American Mutual i.e., American Mutual and MFS Series go up and down completely randomly.

Pair Corralation between American Mutual and MFS Series

Assuming the 90 days horizon American Mutual is expected to generate 0.94 times more return on investment than MFS Series. However, American Mutual is 1.06 times less risky than MFS Series. It trades about -0.29 of its potential returns per unit of risk. MFS Series Trust is currently generating about -0.33 per unit of risk. If you would invest  5,071  in American Mutual on June 26, 2021 and sell it today you would lose (152.00)  from holding American Mutual or give up 3.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

American Mutual  vs.  MFS Series Trust

 Performance (%) 
      Timeline 
American Mutual 
 American Performance
0 of 100
Over the last 90 days American Mutual has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, American Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
MFS Series Trust 
 MFEBX Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in MFS Series Trust are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, MFS Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Mutual and MFS Series Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with American Mutual and MFS Series

The main advantage of trading using opposite American Mutual and MFS Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, MFS Series 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 Series will offset losses from the drop in MFS Series' long position.
The idea behind American Mutual and MFS Series Trust 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.
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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