Correlation Between Smallcap Fund and Mfs Modity

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

By analyzing existing cross correlation between Smallcap Fund Fka and Mfs Modity Strategy, you can compare the effects of market volatilities on Smallcap Fund and Mfs Modity 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 Smallcap Fund with a short position of Mfs Modity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Mfs Modity.

Diversification Opportunities for Smallcap Fund and Mfs Modity

0.02

Correlation Coefficient

Smallcap Fund  Mfs Modity

Significant diversification

The 3 months correlation between Smallcap and Mfs is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Mfs Modity Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Modity Strategy and Smallcap Fund 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 Smallcap Fund Fka are associated (or correlated) with Mfs Modity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Modity Strategy has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Mfs Modity go up and down completely randomly.

Pair Corralation between Smallcap Fund and Mfs Modity

Assuming the 90 days horizon Smallcap Fund is expected to generate 1.19 times less return on investment than Mfs Modity. In addition to that, Smallcap Fund is 1.78 times more volatile than Mfs Modity Strategy. It trades about 0.03 of its total potential returns per unit of risk. Mfs Modity Strategy is currently generating about 0.06 per unit of volatility. If you would invest  340.00  in Mfs Modity Strategy on May 27, 2025 and sell it today you would earn a total of  43.00  from holding Mfs Modity Strategy or generate 12.65% return on investment over 90 days.

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

Smallcap Fund Fka  vs.  Mfs Modity Strategy

Smallcap Fund Fka

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Fund Fka are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Smallcap Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Mfs Modity Strategy

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Modity Strategy are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mfs Modity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Smallcap Fund and Mfs Modity

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

The idea behind Smallcap Fund Fka and Mfs Modity Strategy 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.