Correlation Between MFS High and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both MFS High and Invesco 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 Invesco 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 Invesco Municipal Trust, you can compare the effects of market volatilities on MFS High and Invesco 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 Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and Invesco Municipal.
Diversification Opportunities for MFS High and Invesco Municipal
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MFS and Invesco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and Invesco Municipal Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Trust 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 Invesco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Municipal Trust has no effect on the direction of MFS High i.e., MFS High and Invesco Municipal go up and down completely randomly.
Pair Corralation between MFS High and Invesco Municipal
Considering the 90-day investment horizon MFS High Income is expected to under-perform the Invesco Municipal. In addition to that, MFS High is 1.12 times more volatile than Invesco Municipal Trust. It trades about -0.16 of its total potential returns per unit of risk. Invesco Municipal Trust is currently generating about -0.11 per unit of volatility. If you would invest 1,002 in Invesco Municipal Trust on August 23, 2024 and sell it today you would lose (16.00) from holding Invesco Municipal Trust or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS High Income vs. Invesco Municipal Trust
Performance |
| Timeline |
| MFS High Income |
| Invesco Municipal Trust |
MFS High and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS High and Invesco Municipal
The main advantage of trading using opposite MFS High and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS High position performs unexpectedly, Invesco 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 Invesco Municipal will offset losses from the drop in Invesco 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 |
| Invesco Municipal vs. Pioneer Floating Rate | Invesco Municipal vs. The Gabelli Equity | Invesco Municipal vs. Pioneer Municipal High | Invesco 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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