Correlation Between MFS Investment and Central Securities
Can any of the company-specific risk be diversified away by investing in both MFS Investment and Central Securities 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 Central Securities 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 Central Securities, you can compare the effects of market volatilities on MFS Investment and Central Securities 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 Central Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Central Securities.
Diversification Opportunities for MFS Investment and Central Securities
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MFS and Central is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Central Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Securities 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 Central Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Securities has no effect on the direction of MFS Investment i.e., MFS Investment and Central Securities go up and down completely randomly.
Pair Corralation between MFS Investment and Central Securities
Considering the 90-day investment horizon MFS Investment Grade is expected to generate 0.54 times more return on investment than Central Securities. However, MFS Investment Grade is 1.87 times less risky than Central Securities. It trades about -0.25 of its potential returns per unit of risk. Central Securities is currently generating about -0.29 per unit of risk. If you would invest 803.00 in MFS Investment Grade on January 8, 2025 and sell it today you would lose (35.00) from holding MFS Investment Grade or give up 4.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Investment Grade vs. Central Securities
Performance |
| Timeline |
| MFS Investment Grade |
| Central Securities |
MFS Investment and Central Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and Central Securities
The main advantage of trading using opposite MFS Investment and Central Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, Central Securities 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 Central Securities will offset losses from the drop in Central Securities' long position.| MFS Investment vs. Eaton Vance National | MFS Investment vs. Nuveen California Select | MFS Investment vs. Federated Premier Municipal |
| Central Securities vs. Munivest Fund | Central Securities vs. DWS Municipal Income | Central Securities vs. Blackrock Muniyield Quality | Central Securities vs. Blackrock Muniyield Quality |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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