Correlation Between MFS High and BlackRock Municipal
Can any of the company-specific risk be diversified away by investing in both MFS High and BlackRock 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 BlackRock Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFS High Income and BlackRock Municipal Income, you can compare the effects of market volatilities on MFS High and BlackRock 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 BlackRock Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and BlackRock Municipal.
Diversification Opportunities for MFS High and BlackRock Municipal
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MFS and BlackRock is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and BlackRock Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock 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 Income are associated (or correlated) with BlackRock Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Municipal has no effect on the direction of MFS High i.e., MFS High and BlackRock Municipal go up and down completely randomly.
Pair Corralation between MFS High and BlackRock Municipal
Considering the 90-day investment horizon MFS High Income is expected to generate 1.31 times more return on investment than BlackRock Municipal. However, MFS High is 1.31 times more volatile than BlackRock Municipal Income. It trades about 0.06 of its potential returns per unit of risk. BlackRock Municipal Income is currently generating about 0.06 per unit of risk. If you would invest 327.00 in MFS High Income on August 31, 2024 and sell it today you would earn a total of 61.00 from holding MFS High Income or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS High Income vs. BlackRock Municipal Income
Performance |
| Timeline |
| MFS High Income |
| BlackRock Municipal |
MFS High and BlackRock Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS High and BlackRock Municipal
The main advantage of trading using opposite MFS High and BlackRock Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS High position performs unexpectedly, BlackRock 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 BlackRock Municipal will offset losses from the drop in BlackRock Municipal's long position.| MFS High vs. MFS Investment Grade | MFS High vs. Eaton Vance National | MFS High vs. Invesco High Income | MFS High vs. Blackrock Muniholdings Ny |
| BlackRock Municipal vs. HUMANA INC | BlackRock Municipal vs. SCOR PK | BlackRock Municipal vs. Aquagold International | BlackRock Municipal vs. Thrivent 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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