Correlation Between MFS High and Nuveen Municipal
Can any of the company-specific risk be diversified away by investing in both MFS High and Nuveen 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 Nuveen 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 Nuveen Municipal Credit, you can compare the effects of market volatilities on MFS High and Nuveen 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 Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and Nuveen Municipal.
Diversification Opportunities for MFS High and Nuveen Municipal
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MFS and Nuveen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and Nuveen Municipal Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal Credit 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 Nuveen Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Municipal Credit has no effect on the direction of MFS High i.e., MFS High and Nuveen Municipal go up and down completely randomly.
Pair Corralation between MFS High and Nuveen Municipal
Considering the 90-day investment horizon MFS High Income is expected to under-perform the Nuveen Municipal. But the stock apears to be less risky and, when comparing its historical volatility, MFS High Income is 1.15 times less risky than Nuveen Municipal. The stock trades about -0.07 of its potential returns per unit of risk. The Nuveen Municipal Credit is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,096 in Nuveen Municipal Credit on August 27, 2024 and sell it today you would earn a total of 5.00 from holding Nuveen Municipal Credit or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS High Income vs. Nuveen Municipal Credit
Performance |
| Timeline |
| MFS High Income |
| Nuveen Municipal Credit |
MFS High and Nuveen Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS High and Nuveen Municipal
The main advantage of trading using opposite MFS High and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS High position performs unexpectedly, Nuveen 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 Nuveen Municipal will offset losses from the drop in Nuveen 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 |
| Nuveen Municipal vs. Munivest Fund | Nuveen Municipal vs. Blackrock Muniholdings Quality | Nuveen Municipal vs. DWS Municipal Income | Nuveen Municipal vs. Blackrock Muniholdings Closed |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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