Correlation Between Northern Large and Mfs Value
Can any of the company-specific risk be diversified away by investing in both Northern 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 Northern 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 Northern Large Cap and Mfs Value Fund, you can compare the effects of market volatilities on Northern 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 Northern Large with a short position of Mfs Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Large and Mfs Value.
Diversification Opportunities for Northern Large and Mfs Value
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Mfs is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Northern 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 Northern 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 Northern 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 Northern Large i.e., Northern Large and Mfs Value go up and down completely randomly.
Pair Corralation between Northern Large and Mfs Value
Assuming the 90 days horizon Northern Large Cap is expected to generate 1.18 times more return on investment than Mfs Value. However, Northern Large is 1.18 times more volatile than Mfs Value Fund. It trades about -0.21 of its potential returns per unit of risk. Mfs Value Fund is currently generating about -0.27 per unit of risk. If you would invest 2,097 in Northern Large Cap on January 20, 2024 and sell it today you would lose (71.00) from holding Northern Large Cap or give up 3.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Large Cap vs. Mfs Value Fund
Performance |
| Timeline |
| Northern Large Cap |
| Mfs Value Fund |
Northern Large and Mfs Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Large and Mfs Value
The main advantage of trading using opposite Northern Large and Mfs Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern 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.| Northern Large vs. Northern Bond Index | Northern Large vs. Northern E Bond | Northern Large vs. Northern Arizona Tax Exempt | Northern Large vs. Northern Emerging Markets |
| Mfs Value vs. Mfs Prudent Investor | Mfs Value vs. Mfs Prudent Investor | Mfs Value vs. Mfs Prudent Investor | Mfs Value vs. Mfs Prudent Investor |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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