Correlation Between MFS Active and Vanguard Core

Can any of the company-specific risk be diversified away by investing in both MFS Active and Vanguard Core 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 Vanguard Core 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 Vanguard Core Bond, you can compare the effects of market volatilities on MFS Active and Vanguard Core 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 Vanguard Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Active and Vanguard Core.

Diversification Opportunities for MFS Active and Vanguard Core

0.98

Correlation Coefficient

MFS Active  Vanguard Core

Almost no diversification

The 3 months correlation between MFS and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding MFS Active Core and Vanguard Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Core Bond 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 Vanguard Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Core Bond has no effect on the direction of MFS Active i.e., MFS Active and Vanguard Core go up and down completely randomly.

Pair Corralation between MFS Active and Vanguard Core

Given the investment horizon of 90 days MFS Active is expected to generate 1.08 times less return on investment than Vanguard Core. In addition to that, MFS Active Core is as risky as Vanguard Core. It trades about 0.18 of its total potential returns per unit of risk. Vanguard Core Bond is currently generating about 0.19 per unit of volatility. If you would invest  7,510  in Vanguard Core Bond on May 22, 2025 and sell it today you would earn a total of  239.00  from holding Vanguard Core Bond or generate 3.18% return on investment over 90 days.

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

MFS Active Core  vs.  Vanguard Core Bond

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.

Vanguard Core Bond

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Core Bond are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vanguard Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MFS Active and Vanguard Core

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

The idea behind MFS Active Core and Vanguard Core Bond 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.