Correlation Between MFS Investment and New Germany
Can any of the company-specific risk be diversified away by investing in both MFS Investment and New Germany 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 New Germany 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 New Germany Closed, you can compare the effects of market volatilities on MFS Investment and New Germany 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 New Germany. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and New Germany.
Diversification Opportunities for MFS Investment and New Germany
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MFS and New is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and New Germany Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Germany Closed 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 New Germany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Germany Closed has no effect on the direction of MFS Investment i.e., MFS Investment and New Germany go up and down completely randomly.
Pair Corralation between MFS Investment and New Germany
Considering the 90-day investment horizon MFS Investment Grade is expected to generate 0.72 times more return on investment than New Germany. However, MFS Investment Grade is 1.39 times less risky than New Germany. It trades about 0.06 of its potential returns per unit of risk. New Germany Closed is currently generating about -0.01 per unit of risk. If you would invest 680.00 in MFS Investment Grade on August 31, 2024 and sell it today you would earn a total of 144.00 from holding MFS Investment Grade or generate 21.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
MFS Investment Grade vs. New Germany Closed
Performance |
| Timeline |
| MFS Investment Grade |
| New Germany Closed |
MFS Investment and New Germany Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and New Germany
The main advantage of trading using opposite MFS Investment and New Germany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, New Germany 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 New Germany will offset losses from the drop in New Germany's long position.| MFS Investment vs. HUMANA INC | MFS Investment vs. SCOR PK | MFS Investment vs. Aquagold International | MFS Investment vs. Thrivent High Yield |
| New Germany vs. MFS Investment Grade | New Germany vs. Eaton Vance Municipal | New Germany vs. DTF Tax Free | New Germany vs. HUMANA INC |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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