Correlation Between The National and Mfs Municipal
Can any of the company-specific risk be diversified away by investing in both The National 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 The National and Mfs Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and Mfs Municipal High, you can compare the effects of market volatilities on The National 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 The National with a short position of Mfs Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of The National and Mfs Municipal.
Diversification Opportunities for The National and Mfs Municipal
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between The and Mfs is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Mfs Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Municipal High and The National 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 The National Tax Free 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 High has no effect on the direction of The National i.e., The National and Mfs Municipal go up and down completely randomly.
Pair Corralation between The National and Mfs Municipal
Assuming the 90 days horizon The National is expected to generate 1.01 times less return on investment than Mfs Municipal. But when comparing it to its historical volatility, The National Tax Free is 1.29 times less risky than Mfs Municipal. It trades about 0.21 of its potential returns per unit of risk. Mfs Municipal High is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 756.00 in Mfs Municipal High on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Mfs Municipal High or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
The National Tax Free vs. Mfs Municipal High
Performance |
| Timeline |
| National Tax |
| Mfs Municipal High |
The National and Mfs Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The National and Mfs Municipal
The main advantage of trading using opposite The National and Mfs Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The National 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 National vs. The Missouri Tax Free | The National vs. The Bond Fund | The National vs. High Yield Municipal Fund | The National vs. Fidelity Intermediate Municipal |
| Mfs Municipal vs. Gamco Global Telecommunications | Mfs Municipal vs. The National Tax Free | Mfs Municipal vs. Federated Ohio Municipal | Mfs Municipal vs. Bbh Intermediate Municipal |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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