Correlation Between Roundhill Magnificent and MFS Active

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

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

Diversification Opportunities for Roundhill Magnificent and MFS Active

0.78

Correlation Coefficient

Roundhill Magnificent  MFS Active

Poor diversification

The 3 months correlation between Roundhill and MFS is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Magnificent Seven and MFS Active Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Active Value and Roundhill Magnificent 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 Roundhill Magnificent Seven 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 Value has no effect on the direction of Roundhill Magnificent i.e., Roundhill Magnificent and MFS Active go up and down completely randomly.

Pair Corralation between Roundhill Magnificent and MFS Active

Given the investment horizon of 90 days Roundhill Magnificent Seven is expected to generate 1.91 times more return on investment than MFS Active. However, Roundhill Magnificent is 1.91 times more volatile than MFS Active Value. It trades about 0.18 of its potential returns per unit of risk. MFS Active Value is currently generating about 0.15 per unit of risk. If you would invest  5,292  in Roundhill Magnificent Seven on May 25, 2025 and sell it today you would earn a total of  689.00  from holding Roundhill Magnificent Seven or generate 13.02% return on investment over 90 days.

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

Roundhill Magnificent Seven  vs.  MFS Active Value

Roundhill Magnificent

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roundhill Magnificent Seven are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Roundhill Magnificent unveiled solid returns over the last few months and may actually be approaching a breakup point.

MFS Active Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Active Value are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, MFS Active is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Roundhill Magnificent and MFS Active

The main advantage of trading using opposite Roundhill Magnificent and MFS Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Magnificent 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 Roundhill Magnificent Seven and MFS Active Value 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.