Correlation Between BlackRock California and MFS High
Can any of the company-specific risk be diversified away by investing in both BlackRock California and MFS High 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 BlackRock California and MFS High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock California Municipal and MFS High Yield, you can compare the effects of market volatilities on BlackRock California and MFS High 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 BlackRock California with a short position of MFS High. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock California and MFS High.
Diversification Opportunities for BlackRock California and MFS High
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlackRock and MFS is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock California Municipal and MFS High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Yield and BlackRock California 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 BlackRock California Municipal are associated (or correlated) with MFS High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS High Yield has no effect on the direction of BlackRock California i.e., BlackRock California and MFS High go up and down completely randomly.
Pair Corralation between BlackRock California and MFS High
Considering the 90-day investment horizon BlackRock California is expected to generate 1.43 times less return on investment than MFS High. But when comparing it to its historical volatility, BlackRock California Municipal is 1.14 times less risky than MFS High. It trades about 0.05 of its potential returns per unit of risk. MFS High Yield is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 295.00 in MFS High Yield on August 31, 2024 and sell it today you would earn a total of 70.00 from holding MFS High Yield or generate 23.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock California Municipal vs. MFS High Yield
Performance |
| Timeline |
| BlackRock California |
| MFS High Yield |
BlackRock California and MFS High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock California and MFS High
The main advantage of trading using opposite BlackRock California and MFS High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock California position performs unexpectedly, MFS High 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 High will offset losses from the drop in MFS High's long position.| BlackRock California vs. Blackrock Muniyield Quality | BlackRock California vs. Blackrock Muni Intermediate | BlackRock California vs. Nuveen California Amt | BlackRock California vs. Munivest Fund |
| MFS High vs. MFS Investment Grade | MFS High vs. MFS Municipal Income | MFS High vs. DTF Tax Free | MFS High vs. MFS Government Markets |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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