Correlation Between Amazon and Mfs Municipal
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and Mfs Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Mfs Municipal Limited, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of Mfs Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Mfs Municipal.
Diversification Opportunities for Amazon and Mfs Municipal
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Amazon and Mfs is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc 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 Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and Mfs Municipal go up and down completely randomly.
Pair Corralation between Amazon and Mfs Municipal
Given the investment horizon of 90 days Amazon Inc is expected to generate 34.22 times more return on investment than Mfs Municipal. However, Amazon is 34.22 times more volatile than Mfs Municipal Limited. It trades about 0.26 of its potential returns per unit of risk. Mfs Municipal Limited is currently generating about 0.55 per unit of risk. If you would invest 20,891 in Amazon Inc on September 13, 2024 and sell it today you would earn a total of 2,135 from holding Amazon Inc or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Mfs Municipal Limited
Performance |
| Timeline |
| Amazon Inc |
| Mfs Municipal Limited |
Amazon and Mfs Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Mfs Municipal
The main advantage of trading using opposite Amazon and Mfs Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.The idea behind Amazon Inc and Mfs Municipal Limited 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.| Mfs Municipal vs. Deutsche Real Estate | Mfs Municipal vs. Redwood Real Estate | Mfs Municipal vs. Short Real Estate | Mfs Municipal vs. Pender Real Estate |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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