Correlation Between MFS High and Invesco Quality
Can any of the company-specific risk be diversified away by investing in both MFS High and Invesco Quality 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 MFS High and Invesco Quality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFS High Yield and Invesco Quality Municipal, you can compare the effects of market volatilities on MFS High and Invesco Quality 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 MFS High with a short position of Invesco Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and Invesco Quality.
Diversification Opportunities for MFS High and Invesco Quality
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MFS and Invesco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Yield and Invesco Quality Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Quality Municipal and MFS High 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 MFS High Yield are associated (or correlated) with Invesco Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Quality Municipal has no effect on the direction of MFS High i.e., MFS High and Invesco Quality go up and down completely randomly.
Pair Corralation between MFS High and Invesco Quality
Considering the 90-day investment horizon MFS High Yield is expected to generate 1.26 times more return on investment than Invesco Quality. However, MFS High is 1.26 times more volatile than Invesco Quality Municipal. It trades about 0.05 of its potential returns per unit of risk. Invesco Quality Municipal is currently generating about 0.04 per unit of risk. If you would invest 295.00 in MFS High Yield on August 27, 2024 and sell it today you would earn a total of 60.00 from holding MFS High Yield or generate 20.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS High Yield vs. Invesco Quality Municipal
Performance |
| Timeline |
| MFS High Yield |
| Invesco Quality Municipal |
MFS High and Invesco Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS High and Invesco Quality
The main advantage of trading using opposite MFS High and Invesco Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS High position performs unexpectedly, Invesco Quality 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 Invesco Quality will offset losses from the drop in Invesco Quality's long position.| MFS High vs. PowerUp Acquisition Corp | MFS High vs. Aurora Innovation | MFS High vs. HUMANA INC | MFS High vs. Aquagold International |
| Invesco Quality vs. PowerUp Acquisition Corp | Invesco Quality vs. Aurora Innovation | Invesco Quality vs. HUMANA INC | Invesco Quality vs. Aquagold International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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