Correlation Between Mfs Commodity and Absolute Capital

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

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

Diversification Opportunities for Mfs Commodity and Absolute Capital

0.64

Correlation Coefficient

Mfs Commodity  Absolute Capital

Poor diversification

The 3 months correlation between Mfs and Absolute is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Commodity Strategy and Absolute Capital Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Capital Asset and Mfs Commodity 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 Commodity Strategy are associated (or correlated) with Absolute Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Capital Asset has no effect on the direction of Mfs Commodity i.e., Mfs Commodity and Absolute Capital go up and down completely randomly.

Pair Corralation between Mfs Commodity and Absolute Capital

Assuming the 90 days horizon Mfs Commodity is expected to generate 2.15 times less return on investment than Absolute Capital. In addition to that, Mfs Commodity is 1.35 times more volatile than Absolute Capital Asset. It trades about 0.09 of its total potential returns per unit of risk. Absolute Capital Asset is currently generating about 0.27 per unit of volatility. If you would invest  1,113  in Absolute Capital Asset on May 1, 2025 and sell it today you would earn a total of  103.00  from holding Absolute Capital Asset or generate 9.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Mfs Commodity Strategy  vs.  Absolute Capital Asset

Mfs Commodity Strategy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Commodity Strategy are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Mfs Commodity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Absolute Capital Asset

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Capital Asset are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Absolute Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Mfs Commodity and Absolute Capital

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

The idea behind Mfs Commodity Strategy and Absolute Capital Asset 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.