Correlation Between MFS Active and Columbia Diversified

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

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

Diversification Opportunities for MFS Active and Columbia Diversified

0.85

Correlation Coefficient

MFS Active  Columbia Diversified

Very poor diversification

The 3 months correlation between MFS and Columbia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding MFS Active Core and Columbia Diversified Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Diversified and MFS Active 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 Active Core are associated (or correlated) with Columbia Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Diversified has no effect on the direction of MFS Active i.e., MFS Active and Columbia Diversified go up and down completely randomly.

Pair Corralation between MFS Active and Columbia Diversified

Given the investment horizon of 90 days MFS Active is expected to generate 1.31 times less return on investment than Columbia Diversified. In addition to that, MFS Active is 1.17 times more volatile than Columbia Diversified Fixed. It trades about 0.18 of its total potential returns per unit of risk. Columbia Diversified Fixed is currently generating about 0.27 per unit of volatility. If you would invest  1,754  in Columbia Diversified Fixed on May 22, 2025 and sell it today you would earn a total of  68.00  from holding Columbia Diversified Fixed or generate 3.88% return on investment over 90 days.

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

MFS Active Core  vs.  Columbia Diversified Fixed

MFS Active Core

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Active Core are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MFS Active is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Columbia Diversified

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Diversified Fixed are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Columbia Diversified is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MFS Active and Columbia Diversified

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

The idea behind MFS Active Core and Columbia Diversified Fixed 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.