Correlation Between Mfs Diversified and M Large

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

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

Diversification Opportunities for Mfs Diversified and M Large

0.93

Correlation Coefficient

Mfs Diversified  M Large

Almost no diversification

The 3 months correlation between Mfs and MTCGX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Diversified Income and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large Cap and Mfs Diversified 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 Diversified Income are associated (or correlated) with M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of Mfs Diversified i.e., Mfs Diversified and M Large go up and down completely randomly.

Pair Corralation between Mfs Diversified and M Large

Assuming the 90 days horizon Mfs Diversified is expected to generate 3.1 times less return on investment than M Large. But when comparing it to its historical volatility, Mfs Diversified Income is 2.82 times less risky than M Large. It trades about 0.21 of its potential returns per unit of risk. M Large Cap is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,333  in M Large Cap on May 21, 2025 and sell it today you would earn a total of  400.00  from holding M Large Cap or generate 12.0% return on investment over 90 days.

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

Mfs Diversified Income  vs.  M Large Cap

Mfs Diversified Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Diversified Income are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mfs Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

M Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in M Large Cap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, M Large may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Mfs Diversified and M Large

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

The idea behind Mfs Diversified Income and M Large Cap 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.