Correlation Between American Century and Mfs Municipal
Can any of the company-specific risk be diversified away by investing in both American Century and Mfs Municipal 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 American Century and Mfs Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century High and Mfs Municipal Limited, you can compare the effects of market volatilities on American Century and Mfs Municipal 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 American Century with a short position of Mfs Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Mfs Municipal.
Diversification Opportunities for American Century and Mfs Municipal
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Mfs is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding American Century High and Mfs Municipal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Municipal Limited and American Century 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 American Century High are associated (or correlated) with Mfs Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Municipal Limited has no effect on the direction of American Century i.e., American Century and Mfs Municipal go up and down completely randomly.
Pair Corralation between American Century and Mfs Municipal
Assuming the 90 days horizon American Century High is expected to generate 2.12 times more return on investment than Mfs Municipal. However, American Century is 2.12 times more volatile than Mfs Municipal Limited. It trades about 0.18 of its potential returns per unit of risk. Mfs Municipal Limited is currently generating about 0.14 per unit of risk. If you would invest 750.00 in American Century High on September 12, 2024 and sell it today you would earn a total of 126.00 from holding American Century High or generate 16.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century High vs. Mfs Municipal Limited
Performance |
| Timeline |
| American Century High |
| Mfs Municipal Limited |
American Century and Mfs Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Mfs Municipal
The main advantage of trading using opposite American Century and Mfs Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Mfs Municipal 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 Municipal will offset losses from the drop in Mfs Municipal's long position.| American Century vs. Smallcap Growth Fund | American Century vs. Df Dent Small | American Century vs. Touchstone Small Cap | American Century vs. Aqr Small Cap |
| Mfs Municipal vs. Blackrock Inflation Protected | Mfs Municipal vs. Federated Hermes Inflation | Mfs Municipal vs. Arrow Managed Futures | Mfs Municipal vs. Atac Inflation Rotation |
Check out your portfolio center.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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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