Correlation Between Vaalco Energy and Mfs Modity

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

By analyzing existing cross correlation between Vaalco Energy and Mfs Modity Strategy, you can compare the effects of market volatilities on Vaalco Energy and Mfs Modity 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 Vaalco Energy with a short position of Mfs Modity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vaalco Energy and Mfs Modity.

Diversification Opportunities for Vaalco Energy and Mfs Modity

0.78

Correlation Coefficient

Vaalco Energy  Mfs Modity

Poor diversification

The 3 months correlation between Vaalco and Mfs is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vaalco Energy and Mfs Modity Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Modity Strategy and Vaalco Energy 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 Vaalco Energy are associated (or correlated) with Mfs Modity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Modity Strategy has no effect on the direction of Vaalco Energy i.e., Vaalco Energy and Mfs Modity go up and down completely randomly.

Pair Corralation between Vaalco Energy and Mfs Modity

Considering the 90-day investment horizon Vaalco Energy is expected to under-perform the Mfs Modity. In addition to that, Vaalco Energy is 4.16 times more volatile than Mfs Modity Strategy. It trades about -0.1 of its total potential returns per unit of risk. Mfs Modity Strategy is currently generating about -0.08 per unit of volatility. If you would invest  379.00  in Mfs Modity Strategy on May 5, 2025 and sell it today you would lose (4.00) from holding Mfs Modity Strategy or give up 1.06% of portfolio value over 90 days.

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

Vaalco Energy  vs.  Mfs Modity Strategy

Vaalco Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vaalco Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Vaalco Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Mfs Modity Strategy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Modity Strategy are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mfs Modity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vaalco Energy and Mfs Modity

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

The idea behind Vaalco Energy and Mfs Modity Strategy 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.