Correlation Between Financial and MFS Investment
Can any of the company-specific risk be diversified away by investing in both Financial 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 Financial and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and MFS Investment Grade, you can compare the effects of market volatilities on Financial 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 Financial with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and MFS Investment.
Diversification Opportunities for Financial and MFS Investment
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Financial and MFS is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split 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 Financial 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 Financial 15 Split 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 Financial i.e., Financial and MFS Investment go up and down completely randomly.
Pair Corralation between Financial and MFS Investment
Assuming the 90 days horizon Financial 15 Split is expected to generate 1.89 times more return on investment than MFS Investment. However, Financial is 1.89 times more volatile than MFS Investment Grade. It trades about 0.56 of its potential returns per unit of risk. MFS Investment Grade is currently generating about 0.2 per unit of risk. If you would invest 646.00 in Financial 15 Split on September 1, 2024 and sell it today you would earn a total of 82.00 from holding Financial 15 Split or generate 12.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Financial 15 Split vs. MFS Investment Grade
Performance |
| Timeline |
| Financial 15 Split |
| MFS Investment Grade |
Financial and MFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and MFS Investment
The main advantage of trading using opposite Financial and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial 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.| Financial vs. SEI Investments | Financial vs. Oxford Lane Capital | Financial vs. Blackstone Group | Financial vs. North American Financial |
| MFS Investment vs. Visa Class A | MFS Investment vs. Diamond Hill Investment | MFS Investment vs. Distoken Acquisition | MFS Investment vs. Associated Capital Group |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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