Correlation Between Mfs Lifetime and Massachusetts Investors

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

By analyzing existing cross correlation between Mfs Lifetime 2065 and Massachusetts Investors Trust, you can compare the effects of market volatilities on Mfs Lifetime and Massachusetts Investors 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 Lifetime with a short position of Massachusetts Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Lifetime and Massachusetts Investors.

Diversification Opportunities for Mfs Lifetime and Massachusetts Investors

0.98

Correlation Coefficient

Mfs Lifetime  Massachusetts Investors

Almost no diversification

The 3 months correlation between Mfs and Massachusetts is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Lifetime 2065 and Massachusetts Investors Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massachusetts Investors and Mfs Lifetime 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 Lifetime 2065 are associated (or correlated) with Massachusetts Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massachusetts Investors has no effect on the direction of Mfs Lifetime i.e., Mfs Lifetime and Massachusetts Investors go up and down completely randomly.

Pair Corralation between Mfs Lifetime and Massachusetts Investors

Assuming the 90 days horizon Mfs Lifetime 2065 is expected to under-perform the Massachusetts Investors. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mfs Lifetime 2065 is 1.15 times less risky than Massachusetts Investors. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Massachusetts Investors Trust is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,353  in Massachusetts Investors Trust on February 4, 2024 and sell it today you would lose (10.00) from holding Massachusetts Investors Trust or give up 0.3% of portfolio value over 90 days.

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

Mfs Lifetime 2065  vs.  Massachusetts Investors Trust

Mfs Lifetime 2065

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Lifetime 2065 are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Mfs Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Massachusetts Investors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Massachusetts Investors Trust are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Massachusetts Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mfs Lifetime and Massachusetts Investors

The main advantage of trading using opposite Mfs Lifetime and Massachusetts Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Lifetime position performs unexpectedly, Massachusetts Investors 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 Massachusetts Investors will offset losses from the drop in Massachusetts Investors' long position.

The idea behind Mfs Lifetime 2065 and Massachusetts Investors 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.