Correlation Between MFS Investment and Adams Natural
Can any of the company-specific risk be diversified away by investing in both MFS Investment and Adams Natural 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 Adams Natural 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 Adams Natural Resources, you can compare the effects of market volatilities on MFS Investment and Adams Natural 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 Adams Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Adams Natural.
Diversification Opportunities for MFS Investment and Adams Natural
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between MFS and Adams is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Adams Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Natural Resources 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 Adams Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Natural Resources has no effect on the direction of MFS Investment i.e., MFS Investment and Adams Natural go up and down completely randomly.
Pair Corralation between MFS Investment and Adams Natural
Considering the 90-day investment horizon MFS Investment Grade is expected to generate 0.49 times more return on investment than Adams Natural. However, MFS Investment Grade is 2.03 times less risky than Adams Natural. It trades about 0.11 of its potential returns per unit of risk. Adams Natural Resources is currently generating about 0.05 per unit of risk. If you would invest 800.00 in MFS Investment Grade on August 25, 2024 and sell it today you would earn a total of 10.00 from holding MFS Investment Grade or generate 1.25% 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. Adams Natural Resources
Performance |
| Timeline |
| MFS Investment Grade |
| Adams Natural Resources |
MFS Investment and Adams Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and Adams Natural
The main advantage of trading using opposite MFS Investment and Adams Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, Adams Natural 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 Adams Natural will offset losses from the drop in Adams Natural'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 |
| Adams Natural vs. Liberty All Star | Adams Natural vs. Tri Continental Closed | Adams Natural vs. Royce Value Closed | Adams Natural vs. Central Securities |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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