Correlation Between MFS High and MFS Charter
Can any of the company-specific risk be diversified away by investing in both MFS High and MFS Charter 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 MFS Charter 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 MFS Charter Income, you can compare the effects of market volatilities on MFS High and MFS Charter 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 MFS Charter. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and MFS Charter.
Diversification Opportunities for MFS High and MFS Charter
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MFS and MFS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Yield and MFS Charter Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Charter Income 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 MFS Charter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Charter Income has no effect on the direction of MFS High i.e., MFS High and MFS Charter go up and down completely randomly.
Pair Corralation between MFS High and MFS Charter
Considering the 90-day investment horizon MFS High Yield is expected to generate 0.81 times more return on investment than MFS Charter. However, MFS High Yield is 1.23 times less risky than MFS Charter. It trades about 0.05 of its potential returns per unit of risk. MFS Charter Income is currently generating about 0.03 per unit of risk. If you would invest 296.00 in MFS High Yield on October 7, 2024 and sell it today you would earn a total of 60.00 from holding MFS High Yield or generate 20.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS High Yield vs. MFS Charter Income
Performance |
| Timeline |
| MFS High Yield |
| MFS Charter Income |
MFS High and MFS Charter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS High and MFS Charter
The main advantage of trading using opposite MFS High and MFS Charter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS High position performs unexpectedly, MFS Charter 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 Charter will offset losses from the drop in MFS Charter's long position.| MFS High vs. BlackRock Municipal Income | MFS High vs. BlackRock MIT II | MFS High vs. BlackRock Municipal Income | MFS High vs. BlackRock Long Term Municipal |
| MFS Charter vs. MFS High Income | MFS Charter vs. MFS Investment Grade | MFS Charter vs. Eaton Vance National | MFS Charter vs. MFS High Yield |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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