Correlation Between Mfs Mid and Morningstar Defensive

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

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

Diversification Opportunities for Mfs Mid and Morningstar Defensive

0.74

Correlation Coefficient

Mfs Mid  Morningstar Defensive

Poor diversification

The 3 months correlation between Mfs and Morningstar is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Mid Cap and Morningstar Defensive Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morningstar Defensive and Mfs Mid 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 Mid Cap are associated (or correlated) with Morningstar Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morningstar Defensive has no effect on the direction of Mfs Mid i.e., Mfs Mid and Morningstar Defensive go up and down completely randomly.

Pair Corralation between Mfs Mid and Morningstar Defensive

Assuming the 90 days horizon Mfs Mid Cap is expected to generate 5.7 times more return on investment than Morningstar Defensive. However, Mfs Mid is 5.7 times more volatile than Morningstar Defensive Bond. It trades about 0.19 of its potential returns per unit of risk. Morningstar Defensive Bond is currently generating about 0.15 per unit of risk. If you would invest  3,056  in Mfs Mid Cap on May 3, 2025 and sell it today you would earn a total of  296.00  from holding Mfs Mid Cap or generate 9.69% return on investment over 90 days.

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

Mfs Mid Cap  vs.  Morningstar Defensive Bond

Mfs Mid Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Mid Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mfs Mid may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Morningstar Defensive

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morningstar Defensive Bond are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Morningstar Defensive 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 Mid and Morningstar Defensive

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

The idea behind Mfs Mid Cap and Morningstar Defensive 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.