Correlation Between MFS Investment and Western Asset
Can any of the company-specific risk be diversified away by investing in both MFS Investment and Western Asset 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 Western Asset 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 Western Asset High, you can compare the effects of market volatilities on MFS Investment and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Western Asset.
Diversification Opportunities for MFS Investment and Western Asset
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MFS and Western is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset High has no effect on the direction of MFS Investment i.e., MFS Investment and Western Asset go up and down completely randomly.
Pair Corralation between MFS Investment and Western Asset
Considering the 90-day investment horizon MFS Investment is expected to generate 1.02 times less return on investment than Western Asset. But when comparing it to its historical volatility, MFS Investment Grade is 1.35 times less risky than Western Asset. It trades about 0.18 of its potential returns per unit of risk. Western Asset High is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 359.00 in Western Asset High on September 2, 2024 and sell it today you would earn a total of 39.00 from holding Western Asset High or generate 10.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Investment Grade vs. Western Asset High
Performance |
| Timeline |
| MFS Investment Grade |
| Western Asset High |
MFS Investment and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and Western Asset
The main advantage of trading using opposite MFS Investment and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Western Asset Global | Western Asset vs. Western Asset Global | Western Asset vs. European Equity Closed | Western Asset vs. Western Asset 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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