Correlation Between Northern Lights and MFS Investment
Can any of the company-specific risk be diversified away by investing in both Northern Lights and MFS Investment 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 Northern Lights and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and MFS Investment Grade, you can compare the effects of market volatilities on Northern Lights and MFS Investment 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 Northern Lights with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and MFS Investment.
Diversification Opportunities for Northern Lights and MFS Investment
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Northern and MFS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade and Northern Lights 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 Northern Lights are associated (or correlated) with MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of Northern Lights i.e., Northern Lights and MFS Investment go up and down completely randomly.
Pair Corralation between Northern Lights and MFS Investment
Given the investment horizon of 90 days Northern Lights is expected to generate 0.69 times more return on investment than MFS Investment. However, Northern Lights is 1.44 times less risky than MFS Investment. It trades about 0.42 of its potential returns per unit of risk. MFS Investment Grade is currently generating about 0.19 per unit of risk. If you would invest 2,513 in Northern Lights on August 30, 2024 and sell it today you would earn a total of 59.00 from holding Northern Lights or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 60.87% |
| Values | Daily Returns |
Northern Lights vs. MFS Investment Grade
Performance |
| Timeline |
| Northern Lights |
| MFS Investment Grade |
Northern Lights and MFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and MFS Investment
The main advantage of trading using opposite Northern Lights and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, MFS Investment 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 Investment will offset losses from the drop in MFS Investment's long position.| Northern Lights vs. Vanguard Total Stock | Northern Lights vs. SPDR SP 500 | Northern Lights vs. iShares Core SP | Northern Lights vs. Vanguard Total Bond |
| MFS Investment vs. Invesco High Income | MFS Investment vs. Eaton Vance National | MFS Investment vs. Nuveen California Select | MFS Investment vs. Federated Premier Municipal |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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