Correlation Between MFS Investment and Oak Ridge
Can any of the company-specific risk be diversified away by investing in both MFS Investment and Oak Ridge 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 Oak Ridge 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 Oak Ridge Financial, you can compare the effects of market volatilities on MFS Investment and Oak Ridge 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 Oak Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Oak Ridge.
Diversification Opportunities for MFS Investment and Oak Ridge
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between MFS and Oak is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Oak Ridge Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Ridge Financial 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 Oak Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Ridge Financial has no effect on the direction of MFS Investment i.e., MFS Investment and Oak Ridge go up and down completely randomly.
Pair Corralation between MFS Investment and Oak Ridge
Considering the 90-day investment horizon MFS Investment is expected to generate 3.23 times less return on investment than Oak Ridge. But when comparing it to its historical volatility, MFS Investment Grade is 1.5 times less risky than Oak Ridge. It trades about 0.17 of its potential returns per unit of risk. Oak Ridge Financial is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,917 in Oak Ridge Financial on August 29, 2024 and sell it today you would earn a total of 143.00 from holding Oak Ridge Financial or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Investment Grade vs. Oak Ridge Financial
Performance |
| Timeline |
| MFS Investment Grade |
| Oak Ridge Financial |
MFS Investment and Oak Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and Oak Ridge
The main advantage of trading using opposite MFS Investment and Oak Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, Oak Ridge 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 Oak Ridge will offset losses from the drop in Oak Ridge's long position.| MFS Investment vs. Invesco High Income | MFS Investment vs. Eaton Vance National | MFS Investment vs. Nuveen California Select | MFS Investment vs. Federated Premier Municipal |
| Oak Ridge vs. Invesco High Income | Oak Ridge vs. Blackrock Muniholdings Ny | Oak Ridge vs. Nuveen California Select | Oak Ridge vs. MFS Investment Grade |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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