Correlation Between MFS Investment and Southern Michigan
Can any of the company-specific risk be diversified away by investing in both MFS Investment and Southern Michigan 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 Southern Michigan 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 Southern Michigan Bancorp, you can compare the effects of market volatilities on MFS Investment and Southern Michigan 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 Southern Michigan. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Southern Michigan.
Diversification Opportunities for MFS Investment and Southern Michigan
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MFS and Southern is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Southern Michigan Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Michigan Bancorp 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 Southern Michigan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Michigan Bancorp has no effect on the direction of MFS Investment i.e., MFS Investment and Southern Michigan go up and down completely randomly.
Pair Corralation between MFS Investment and Southern Michigan
Considering the 90-day investment horizon MFS Investment is expected to generate 1.41 times less return on investment than Southern Michigan. But when comparing it to its historical volatility, MFS Investment Grade is 2.65 times less risky than Southern Michigan. It trades about 0.2 of its potential returns per unit of risk. Southern Michigan Bancorp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,610 in Southern Michigan Bancorp on September 1, 2024 and sell it today you would earn a total of 265.00 from holding Southern Michigan Bancorp or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
MFS Investment Grade vs. Southern Michigan Bancorp
Performance |
| Timeline |
| MFS Investment Grade |
| Southern Michigan Bancorp |
MFS Investment and Southern Michigan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and Southern Michigan
The main advantage of trading using opposite MFS Investment and Southern Michigan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, Southern Michigan 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 Southern Michigan will offset losses from the drop in Southern Michigan's long position.| MFS Investment vs. Visa Class A | MFS Investment vs. Diamond Hill Investment | MFS Investment vs. Distoken Acquisition | MFS Investment vs. Associated Capital Group |
| Southern Michigan vs. HUMANA INC | Southern Michigan vs. SCOR PK | Southern Michigan vs. Aquagold International | Southern Michigan vs. Thrivent High Yield |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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