Correlation Between MFS Investment and Ares Management
Can any of the company-specific risk be diversified away by investing in both MFS Investment and Ares Management 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 Investment and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFS Investment Grade and Ares Management LP, you can compare the effects of market volatilities on MFS Investment and Ares Management 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 Investment with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Ares Management.
Diversification Opportunities for MFS Investment and Ares Management
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between MFS and Ares is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Ares Management LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management LP and MFS Investment 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 Investment Grade are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management LP has no effect on the direction of MFS Investment i.e., MFS Investment and Ares Management go up and down completely randomly.
Pair Corralation between MFS Investment and Ares Management
Considering the 90-day investment horizon MFS Investment is expected to generate 4.23 times less return on investment than Ares Management. But when comparing it to its historical volatility, MFS Investment Grade is 2.96 times less risky than Ares Management. It trades about 0.18 of its potential returns per unit of risk. Ares Management LP is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 18,106 in Ares Management LP on October 25, 2024 and sell it today you would earn a total of 1,484 from holding Ares Management LP or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Investment Grade vs. Ares Management LP
Performance |
| Timeline |
| MFS Investment Grade |
| Ares Management LP |
MFS Investment and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and Ares Management
The main advantage of trading using opposite MFS Investment and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| MFS Investment vs. Eaton Vance National | MFS Investment vs. Nuveen California Select | MFS Investment vs. Federated Premier Municipal |
| Ares Management vs. MFS Investment Grade | Ares Management vs. Eaton Vance National | Ares Management vs. Nuveen California Select | Ares Management vs. Federated Premier Municipal |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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