Correlation Between Mfs Prudent and Mfs Municipal
Can any of the company-specific risk be diversified away by investing in both Mfs Prudent and Mfs Municipal 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 Mfs Prudent and Mfs Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Prudent Investor and Mfs Municipal Limited, you can compare the effects of market volatilities on Mfs Prudent and Mfs Municipal 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 Mfs Prudent with a short position of Mfs Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Prudent and Mfs Municipal.
Diversification Opportunities for Mfs Prudent and Mfs Municipal
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mfs and Mfs is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Prudent Investor and Mfs Municipal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Municipal Limited and Mfs Prudent 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 Mfs Prudent Investor are associated (or correlated) with Mfs Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Municipal Limited has no effect on the direction of Mfs Prudent i.e., Mfs Prudent and Mfs Municipal go up and down completely randomly.
Pair Corralation between Mfs Prudent and Mfs Municipal
Assuming the 90 days horizon Mfs Prudent Investor is expected to generate 2.94 times more return on investment than Mfs Municipal. However, Mfs Prudent is 2.94 times more volatile than Mfs Municipal Limited. It trades about 0.25 of its potential returns per unit of risk. Mfs Municipal Limited is currently generating about 0.12 per unit of risk. If you would invest 1,153 in Mfs Prudent Investor on October 24, 2024 and sell it today you would earn a total of 17.00 from holding Mfs Prudent Investor or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Prudent Investor vs. Mfs Municipal Limited
Performance |
| Timeline |
| Mfs Prudent Investor |
| Mfs Municipal Limited |
Mfs Prudent and Mfs Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Prudent and Mfs Municipal
The main advantage of trading using opposite Mfs Prudent and Mfs Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Prudent position performs unexpectedly, Mfs Municipal 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 Municipal will offset losses from the drop in Mfs Municipal's long position.| Mfs Prudent vs. Smead Value Fund | Mfs Prudent vs. Dodge Cox Stock | Mfs Prudent vs. Calvert Large Cap | Mfs Prudent vs. Qs Large Cap |
| Mfs Municipal vs. Mfs Prudent Investor | Mfs Municipal vs. Mfs Prudent Investor | Mfs Municipal vs. Mfs Prudent Investor | Mfs Municipal vs. Mfs Prudent Investor |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |