Correlation Between Visa and Mfs Value

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

By analyzing existing cross correlation between Visa Class A and Mfs Value Fund, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Mfs Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Mfs Value.

Diversification Opportunities for Visa and Mfs Value

0.58

Correlation Coefficient

Visa  Mfs Value

Very weak diversification

The 3 months correlation between Visa and Mfs is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Mfs Value go up and down completely randomly.

Pair Corralation between Visa and Mfs Value

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Mfs Value. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.08 times less risky than Mfs Value. The stock trades about -0.24 of its potential returns per unit of risk. The Mfs Value Fund is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  5,023  in Mfs Value Fund on January 24, 2024 and sell it today you would lose (86.00) from holding Mfs Value Fund or give up 1.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Mfs Value Fund

Visa Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visa Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Mfs Value Fund

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Value Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Mfs Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Mfs Value

The main advantage of trading using opposite Visa and Mfs Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.

The idea behind Visa Class A and Mfs Value Fund 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.