Correlation Between MFS High and MFS Municipal
Can any of the company-specific risk be diversified away by investing in both MFS High 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 MFS High and MFS Municipal 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 Municipal Income, you can compare the effects of market volatilities on MFS High 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 MFS High with a short position of MFS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and MFS Municipal.
Diversification Opportunities for MFS High and MFS Municipal
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MFS and MFS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Yield 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 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 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 MFS High i.e., MFS High and MFS Municipal go up and down completely randomly.
Pair Corralation between MFS High and MFS Municipal
Considering the 90-day investment horizon MFS High Yield is expected to generate 0.76 times more return on investment than MFS Municipal. However, MFS High Yield is 1.32 times less risky than MFS Municipal. It trades about 0.14 of its potential returns per unit of risk. MFS Municipal Income is currently generating about 0.09 per unit of risk. If you would invest 299.00 in MFS High Yield on August 24, 2024 and sell it today you would earn a total of 59.00 from holding MFS High Yield or generate 19.73% 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 Municipal Income
Performance |
| Timeline |
| MFS High Yield |
| MFS Municipal Income |
MFS High and MFS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS High and MFS Municipal
The main advantage of trading using opposite MFS High and MFS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS High 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.| MFS High vs. Pioneer Floating Rate | MFS High vs. The Gabelli Equity | MFS High vs. Pioneer Municipal High | MFS High vs. Nuveen Global High |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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