Correlation Between MFS Investment and MFS Municipal
Can any of the company-specific risk be diversified away by investing in both MFS Investment and MFS Municipal 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 MFS Municipal 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 MFS Municipal Income, you can compare the effects of market volatilities on MFS Investment and MFS Municipal 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 MFS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and MFS Municipal.
Diversification Opportunities for MFS Investment and MFS Municipal
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MFS and MFS is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and MFS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Municipal Income 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 MFS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Municipal Income has no effect on the direction of MFS Investment i.e., MFS Investment and MFS Municipal go up and down completely randomly.
Pair Corralation between MFS Investment and MFS Municipal
Considering the 90-day investment horizon MFS Investment is expected to generate 1.17 times less return on investment than MFS Municipal. But when comparing it to its historical volatility, MFS Investment Grade is 1.15 times less risky than MFS Municipal. It trades about 0.11 of its potential returns per unit of risk. MFS Municipal Income is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 548.00 in MFS Municipal Income on August 28, 2024 and sell it today you would earn a total of 8.00 from holding MFS Municipal Income or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Investment Grade vs. MFS Municipal Income
Performance |
| Timeline |
| MFS Investment Grade |
| MFS Municipal Income |
MFS Investment and MFS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and MFS Municipal
The main advantage of trading using opposite MFS Investment and MFS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, MFS Municipal 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 MFS Municipal will offset losses from the drop in MFS Municipal's long position.| MFS Investment vs. PowerUp Acquisition Corp | MFS Investment vs. Aurora Innovation | MFS Investment vs. HUMANA INC | MFS Investment vs. Aquagold International |
| MFS Municipal vs. PowerUp Acquisition Corp | MFS Municipal vs. Aurora Innovation | MFS Municipal vs. HUMANA INC | MFS Municipal vs. Aquagold International |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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