Correlation Between Mfs Moderate and Simt Small

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

By analyzing existing cross correlation between Mfs Moderate Allocation and Simt Small Cap, you can compare the effects of market volatilities on Mfs Moderate and Simt Small 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 Moderate with a short position of Simt Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Moderate and Simt Small.

Diversification Opportunities for Mfs Moderate and Simt Small

0.97

Correlation Coefficient

Mfs Moderate  Simt Small

Almost no diversification

The 3 months correlation between Mfs and Simt is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Moderate Allocation and Simt Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Small Cap and Mfs Moderate 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 Moderate Allocation are associated (or correlated) with Simt Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Small Cap has no effect on the direction of Mfs Moderate i.e., Mfs Moderate and Simt Small go up and down completely randomly.

Pair Corralation between Mfs Moderate and Simt Small

Assuming the 90 days horizon Mfs Moderate is expected to generate 1.7 times less return on investment than Simt Small. But when comparing it to its historical volatility, Mfs Moderate Allocation is 2.4 times less risky than Simt Small. It trades about 0.37 of its potential returns per unit of risk. Simt Small Cap is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,936  in Simt Small Cap on April 20, 2025 and sell it today you would earn a total of  533.00  from holding Simt Small Cap or generate 18.15% return on investment over 90 days.

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

Mfs Moderate Allocation  vs.  Simt Small Cap

Mfs Moderate Allocation

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Moderate Allocation are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Mfs Moderate may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Simt Small Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Small Cap are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Simt Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mfs Moderate and Simt Small

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

The idea behind Mfs Moderate Allocation and Simt Small Cap 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .