Correlation Between Federated Premier and MFS High
Can any of the company-specific risk be diversified away by investing in both Federated Premier 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 Federated Premier and MFS High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Premier Municipal and MFS High Yield, you can compare the effects of market volatilities on Federated Premier 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 Federated Premier with a short position of MFS High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and MFS High.
Diversification Opportunities for Federated Premier and MFS High
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and MFS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and MFS High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Yield and Federated Premier 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 Federated Premier Municipal 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 Yield has no effect on the direction of Federated Premier i.e., Federated Premier and MFS High go up and down completely randomly.
Pair Corralation between Federated Premier and MFS High
Considering the 90-day investment horizon Federated Premier Municipal is expected to generate 1.02 times more return on investment than MFS High. However, Federated Premier is 1.02 times more volatile than MFS High Yield. It trades about 0.17 of its potential returns per unit of risk. MFS High Yield is currently generating about 0.09 per unit of risk. If you would invest 1,091 in Federated Premier Municipal on October 21, 2024 and sell it today you would earn a total of 18.00 from holding Federated Premier Municipal or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Premier Municipal vs. MFS High Yield
Performance |
| Timeline |
| Federated Premier |
| MFS High Yield |
Federated Premier and MFS High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and MFS High
The main advantage of trading using opposite Federated Premier and MFS High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier 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.| Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
| MFS High vs. MFS Investment Grade | MFS High vs. MFS Municipal Income | MFS High vs. DTF Tax Free | MFS High vs. MFS Government Markets |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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