Correlation Between MFS Investment and National Capital
Can any of the company-specific risk be diversified away by investing in both MFS Investment and National Capital 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 National Capital 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 National Capital Bank, you can compare the effects of market volatilities on MFS Investment and National Capital 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 National Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and National Capital.
Diversification Opportunities for MFS Investment and National Capital
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MFS and National is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and National Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Capital Bank 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 National Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Capital Bank has no effect on the direction of MFS Investment i.e., MFS Investment and National Capital go up and down completely randomly.
Pair Corralation between MFS Investment and National Capital
Considering the 90-day investment horizon MFS Investment is expected to generate 9.13 times less return on investment than National Capital. But when comparing it to its historical volatility, MFS Investment Grade is 10.89 times less risky than National Capital. It trades about 0.12 of its potential returns per unit of risk. National Capital Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,305 in National Capital Bank on November 28, 2024 and sell it today you would earn a total of 2,295 from holding National Capital Bank or generate 53.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 60.66% |
| Values | Daily Returns |
MFS Investment Grade vs. National Capital Bank
Performance |
| Timeline |
| MFS Investment Grade |
| National Capital Bank |
MFS Investment and National Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and National Capital
The main advantage of trading using opposite MFS Investment and National Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, National Capital 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 National Capital will offset losses from the drop in National Capital's long position.| MFS Investment vs. Eaton Vance National | MFS Investment vs. Nuveen California Select | MFS Investment vs. Federated Premier Municipal |
| National Capital vs. Delhi Bank Corp | National Capital vs. CCSB Financial Corp | National Capital vs. Bank of Utica | National Capital vs. BEO Bancorp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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