Correlation Between First Trust and MFS Active

Can any of the company-specific risk be diversified away by investing in both First Trust and MFS Active 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 First Trust and MFS Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Trust Capital and MFS Active International, you can compare the effects of market volatilities on First Trust and MFS Active 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 First Trust with a short position of MFS Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and MFS Active.

Diversification Opportunities for First Trust and MFS Active

0.88

Correlation Coefficient

First Trust  MFS Active

Very poor diversification

The 3 months correlation between First and MFS is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Capital and MFS Active International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Active International and First Trust 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 First Trust Capital are associated (or correlated) with MFS Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Active International has no effect on the direction of First Trust i.e., First Trust and MFS Active go up and down completely randomly.

Pair Corralation between First Trust and MFS Active

Considering the 90-day investment horizon First Trust is expected to generate 1.19 times less return on investment than MFS Active. In addition to that, First Trust is 1.3 times more volatile than MFS Active International. It trades about 0.17 of its total potential returns per unit of risk. MFS Active International is currently generating about 0.27 per unit of volatility. If you would invest  2,518  in MFS Active International on April 21, 2025 and sell it today you would earn a total of  308.00  from holding MFS Active International or generate 12.23% return on investment over 90 days.

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

First Trust Capital  vs.  MFS Active International

First Trust Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Capital are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

MFS Active International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Active International are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, MFS Active may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with First Trust and MFS Active

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

The idea behind First Trust Capital and MFS Active International 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.