Correlation Between BlackRock Municipal and MFS Municipal
Can any of the company-specific risk be diversified away by investing in both BlackRock Municipal 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 BlackRock Municipal and MFS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock Municipal Income and MFS Municipal Income, you can compare the effects of market volatilities on BlackRock Municipal 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 BlackRock Municipal with a short position of MFS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Municipal and MFS Municipal.
Diversification Opportunities for BlackRock Municipal and MFS Municipal
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlackRock and MFS is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Municipal Income and MFS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Municipal Income and BlackRock Municipal 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 Municipal Income 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 Income has no effect on the direction of BlackRock Municipal i.e., BlackRock Municipal and MFS Municipal go up and down completely randomly.
Pair Corralation between BlackRock Municipal and MFS Municipal
Considering the 90-day investment horizon BlackRock Municipal is expected to generate 1.37 times less return on investment than MFS Municipal. But when comparing it to its historical volatility, BlackRock Municipal Income is 1.35 times less risky than MFS Municipal. It trades about 0.06 of its potential returns per unit of risk. MFS Municipal Income is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 480.00 in MFS Municipal Income on August 31, 2024 and sell it today you would earn a total of 90.00 from holding MFS Municipal Income or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock Municipal Income vs. MFS Municipal Income
Performance |
| Timeline |
| BlackRock Municipal |
| MFS Municipal Income |
BlackRock Municipal and MFS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock Municipal and MFS Municipal
The main advantage of trading using opposite BlackRock Municipal and MFS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Municipal 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.| BlackRock Municipal vs. HUMANA INC | BlackRock Municipal vs. SCOR PK | BlackRock Municipal vs. Aquagold International | BlackRock Municipal vs. Thrivent High Yield |
| MFS Municipal vs. Eaton Vance National | MFS Municipal vs. Invesco High Income | MFS Municipal vs. Blackrock Muniholdings Ny | MFS Municipal vs. Nuveen California Select |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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