Correlation Between Western Asset and MFS Government
Can any of the company-specific risk be diversified away by investing in both Western Asset and MFS Government 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 Western Asset and MFS Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Mortgage and MFS Government Markets, you can compare the effects of market volatilities on Western Asset and MFS Government 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 Western Asset with a short position of MFS Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and MFS Government.
Diversification Opportunities for Western Asset and MFS Government
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and MFS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Mortgage and MFS Government Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Government Markets and Western Asset 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 Western Asset Mortgage are associated (or correlated) with MFS Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Government Markets has no effect on the direction of Western Asset i.e., Western Asset and MFS Government go up and down completely randomly.
Pair Corralation between Western Asset and MFS Government
Considering the 90-day investment horizon Western Asset Mortgage is expected to generate 0.91 times more return on investment than MFS Government. However, Western Asset Mortgage is 1.1 times less risky than MFS Government. It trades about 0.0 of its potential returns per unit of risk. MFS Government Markets is currently generating about -0.16 per unit of risk. If you would invest 1,195 in Western Asset Mortgage on August 24, 2024 and sell it today you would lose (1.00) from holding Western Asset Mortgage or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Mortgage vs. MFS Government Markets
Performance |
| Timeline |
| Western Asset Mortgage |
| MFS Government Markets |
Western Asset and MFS Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and MFS Government
The main advantage of trading using opposite Western Asset and MFS Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, MFS Government 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 Government will offset losses from the drop in MFS Government's long position.| Western Asset vs. Western Asset High | Western Asset vs. Pioneer Municipal High | Western Asset vs. Doubleline Income Solutions | Western Asset vs. Doubleline Yield Opportunities |
| MFS Government vs. MFS Investment Grade | MFS Government vs. Invesco High Income | MFS Government vs. Eaton Vance National | MFS Government vs. Nuveen California Select |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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