Correlation Between MFS Investment and MBT Bancshares
Can any of the company-specific risk be diversified away by investing in both MFS Investment and MBT Bancshares 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 MBT Bancshares 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 MBT Bancshares, you can compare the effects of market volatilities on MFS Investment and MBT Bancshares 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 MBT Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and MBT Bancshares.
Diversification Opportunities for MFS Investment and MBT Bancshares
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MFS and MBT is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and MBT Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBT Bancshares 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 MBT Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBT Bancshares has no effect on the direction of MFS Investment i.e., MFS Investment and MBT Bancshares go up and down completely randomly.
Pair Corralation between MFS Investment and MBT Bancshares
Considering the 90-day investment horizon MFS Investment is expected to generate 2.99 times less return on investment than MBT Bancshares. But when comparing it to its historical volatility, MFS Investment Grade is 1.2 times less risky than MBT Bancshares. It trades about 0.1 of its potential returns per unit of risk. MBT Bancshares is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,885 in MBT Bancshares on August 26, 2024 and sell it today you would earn a total of 65.00 from holding MBT Bancshares or generate 3.45% 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. MBT Bancshares
Performance |
| Timeline |
| MFS Investment Grade |
| MBT Bancshares |
MFS Investment and MBT Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and MBT Bancshares
The main advantage of trading using opposite MFS Investment and MBT Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, MBT Bancshares 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 MBT Bancshares will offset losses from the drop in MBT Bancshares' 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 |
| MBT Bancshares vs. Invesco High Income | MBT Bancshares vs. Blackrock Muniholdings Ny | MBT Bancshares vs. MFS Investment Grade | MBT Bancshares 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |