Correlation Between MFS High and Federated Premier
Can any of the company-specific risk be diversified away by investing in both MFS High and Federated Premier 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 Federated Premier 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 Federated Premier Municipal, you can compare the effects of market volatilities on MFS High and Federated Premier 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 Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and Federated Premier.
Diversification Opportunities for MFS High and Federated Premier
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MFS and Federated is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier 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 Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of MFS High i.e., MFS High and Federated Premier go up and down completely randomly.
Pair Corralation between MFS High and Federated Premier
Considering the 90-day investment horizon MFS High Income is expected to generate 1.08 times more return on investment than Federated Premier. However, MFS High is 1.08 times more volatile than Federated Premier Municipal. It trades about 0.08 of its potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.06 per unit of risk. If you would invest 335.00 in MFS High Income on August 27, 2024 and sell it today you would earn a total of 43.00 from holding MFS High Income or generate 12.84% 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. Federated Premier Municipal
Performance |
| Timeline |
| MFS High Income |
| Federated Premier |
MFS High and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS High and Federated Premier
The main advantage of trading using opposite MFS High and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS High position performs unexpectedly, Federated Premier 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 Federated Premier will offset losses from the drop in Federated Premier's long position.| MFS High vs. PowerUp Acquisition Corp | MFS High vs. Aurora Innovation | MFS High vs. HUMANA INC | MFS High vs. Aquagold International |
| Federated Premier vs. Dws Strategic Municipal | Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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