Correlation Between MFS High and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both MFS High and DWS 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 DWS 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 DWS Municipal Income, you can compare the effects of market volatilities on MFS High and DWS 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 DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and DWS Municipal.
Diversification Opportunities for MFS High and DWS Municipal
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MFS and DWS is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS 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 Income are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of MFS High i.e., MFS High and DWS Municipal go up and down completely randomly.
Pair Corralation between MFS High and DWS Municipal
Considering the 90-day investment horizon MFS High Income is expected to under-perform the DWS Municipal. But the stock apears to be less risky and, when comparing its historical volatility, MFS High Income is 1.07 times less risky than DWS Municipal. The stock trades about -0.16 of its potential returns per unit of risk. The DWS Municipal Income is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 999.00 in DWS Municipal Income on August 23, 2024 and sell it today you would lose (9.00) from holding DWS Municipal Income or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS High Income vs. DWS Municipal Income
Performance |
| Timeline |
| MFS High Income |
| DWS Municipal Income |
MFS High and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS High and DWS Municipal
The main advantage of trading using opposite MFS High and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS High position performs unexpectedly, DWS 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 DWS Municipal will offset losses from the drop in DWS 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 |
| DWS Municipal vs. Pioneer Floating Rate | DWS Municipal vs. The Gabelli Equity | DWS Municipal vs. Pioneer Municipal High | DWS Municipal vs. Nuveen Global High |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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