Correlation Between MFUT and SWP Growth

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

By analyzing existing cross correlation between MFUT and SWP Growth Income, you can compare the effects of market volatilities on MFUT and SWP Growth 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 MFUT with a short position of SWP Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFUT and SWP Growth.

Diversification Opportunities for MFUT and SWP Growth

0.85

Correlation Coefficient

MFUT  SWP Growth

Very poor diversification

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

Pair Corralation between MFUT and SWP Growth

Given the investment horizon of 90 days MFUT is expected to generate 4.02 times less return on investment than SWP Growth. But when comparing it to its historical volatility, MFUT is 1.26 times less risky than SWP Growth. It trades about 0.1 of its potential returns per unit of risk. SWP Growth Income is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,387  in SWP Growth Income on May 1, 2025 and sell it today you would earn a total of  326.00  from holding SWP Growth Income or generate 13.66% return on investment over 90 days.

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

MFUT  vs.  SWP Growth Income

MFUT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MFUT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MFUT is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

SWP Growth Income

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SWP Growth Income are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, SWP Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MFUT and SWP Growth

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

The idea behind MFUT and SWP Growth Income 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.