Correlation Between First Trust and MFS Investment
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Intermediate and MFS Investment Grade, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and MFS Investment.
Diversification Opportunities for First Trust and MFS Investment
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and MFS is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Intermediate 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 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 Intermediate 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 First Trust i.e., First Trust and MFS Investment go up and down completely randomly.
Pair Corralation between First Trust and MFS Investment
Considering the 90-day investment horizon First Trust is expected to generate 1.98 times less return on investment than MFS Investment. But when comparing it to its historical volatility, First Trust Intermediate is 1.23 times less risky than MFS Investment. It trades about 0.12 of its potential returns per unit of risk. MFS Investment Grade is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 805.00 in MFS Investment Grade on September 2, 2024 and sell it today you would earn a total of 19.00 from holding MFS Investment Grade or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Intermediate vs. MFS Investment Grade
Performance |
| Timeline |
| First Trust Intermediate |
| MFS Investment Grade |
First Trust and MFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and MFS Investment
The main advantage of trading using opposite First Trust and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. Tekla Healthcare Investors | First Trust vs. Tekla Healthcare Opportunities | First Trust vs. Eaton Vance Tax | First Trust vs. Tekla World Healthcare |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |