Correlation Between Federated Premier and MFS Charter
Can any of the company-specific risk be diversified away by investing in both Federated Premier and MFS Charter 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 Charter 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 Charter Income, you can compare the effects of market volatilities on Federated Premier and MFS Charter 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 Charter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and MFS Charter.
Diversification Opportunities for Federated Premier and MFS Charter
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and MFS is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and MFS Charter Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Charter Income 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 Charter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Charter Income has no effect on the direction of Federated Premier i.e., Federated Premier and MFS Charter go up and down completely randomly.
Pair Corralation between Federated Premier and MFS Charter
Considering the 90-day investment horizon Federated Premier Municipal is expected to under-perform the MFS Charter. In addition to that, Federated Premier is 1.76 times more volatile than MFS Charter Income. It trades about -0.09 of its total potential returns per unit of risk. MFS Charter Income is currently generating about 0.04 per unit of volatility. If you would invest 623.00 in MFS Charter Income on August 28, 2024 and sell it today you would earn a total of 6.00 from holding MFS Charter Income or generate 0.96% 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 Charter Income
Performance |
| Timeline |
| Federated Premier |
| MFS Charter Income |
Federated Premier and MFS Charter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and MFS Charter
The main advantage of trading using opposite Federated Premier and MFS Charter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier position performs unexpectedly, MFS Charter 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 Charter will offset losses from the drop in MFS Charter's long position.| Federated Premier vs. Dws Strategic Municipal | Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
| MFS Charter vs. MFS High Income | MFS Charter vs. MFS Investment Grade | MFS Charter vs. Eaton Vance National | MFS Charter vs. Invesco High Income |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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