Correlation Between First Trust and MFS High
Can any of the company-specific risk be diversified away by investing in both First Trust and MFS High 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 First Trust and MFS High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and MFS High Income, you can compare the effects of market volatilities on First Trust and MFS High 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 First Trust with a short position of MFS High. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and MFS High.
Diversification Opportunities for First Trust and MFS High
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and MFS is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and MFS High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Income and First Trust 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 First Trust Senior are associated (or correlated) with MFS High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS High Income has no effect on the direction of First Trust i.e., First Trust and MFS High go up and down completely randomly.
Pair Corralation between First Trust and MFS High
Considering the 90-day investment horizon First Trust Senior is expected to generate 0.79 times more return on investment than MFS High. However, First Trust Senior is 1.27 times less risky than MFS High. It trades about 0.16 of its potential returns per unit of risk. MFS High Income is currently generating about 0.12 per unit of risk. If you would invest 1,027 in First Trust Senior on September 1, 2024 and sell it today you would earn a total of 17.00 from holding First Trust Senior or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. MFS High Income
Performance |
| Timeline |
| First Trust Senior |
| MFS High Income |
First Trust and MFS High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and MFS High
The main advantage of trading using opposite First Trust and MFS High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, MFS High 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 High will offset losses from the drop in MFS High's long position.| First Trust vs. Blackstone Gso Long | First Trust vs. Eaton Vance Senior | First Trust vs. Western Asset Global | First Trust vs. Western Asset Global |
| MFS High vs. MFS Investment Grade | MFS High vs. Eaton Vance National | MFS High vs. Invesco High Income | MFS High vs. Blackrock Muniholdings Ny |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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