Correlation Between Small Cap and Mfs Lifetime

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

By analyzing existing cross correlation between Small Cap Value Fund and Mfs Lifetime 2060, you can compare the effects of market volatilities on Small Cap and Mfs Lifetime 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 Small Cap with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Mfs Lifetime.

Diversification Opportunities for Small Cap and Mfs Lifetime

0.86

Correlation Coefficient

Small Cap  Mfs Lifetime

Very poor diversification

The 3 months correlation between Small and Mfs is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Fund and Mfs Lifetime 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2060 and Small Cap 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 Small Cap Value Fund are associated (or correlated) with Mfs Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Lifetime 2060 has no effect on the direction of Small Cap i.e., Small Cap and Mfs Lifetime go up and down completely randomly.

Pair Corralation between Small Cap and Mfs Lifetime

Assuming the 90 days horizon Small Cap Value Fund is expected to generate 2.27 times more return on investment than Mfs Lifetime. However, Small Cap is 2.27 times more volatile than Mfs Lifetime 2060. It trades about 0.13 of its potential returns per unit of risk. Mfs Lifetime 2060 is currently generating about 0.21 per unit of risk. If you would invest  3,378  in Small Cap Value Fund on May 21, 2025 and sell it today you would earn a total of  328.00  from holding Small Cap Value Fund or generate 9.71% return on investment over 90 days.

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

Small Cap Value Fund  vs.  Mfs Lifetime 2060

Small Cap Value

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Value Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Mfs Lifetime 2060

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Lifetime 2060 are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mfs Lifetime may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Small Cap and Mfs Lifetime

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

The idea behind Small Cap Value Fund and Mfs Lifetime 2060 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 the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.