Correlation Between Sprott Focus and MFS Municipal
Can any of the company-specific risk be diversified away by investing in both Sprott Focus 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 Sprott Focus and MFS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Focus Trust and MFS Municipal Income, you can compare the effects of market volatilities on Sprott Focus 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 Sprott Focus with a short position of MFS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Focus and MFS Municipal.
Diversification Opportunities for Sprott Focus and MFS Municipal
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sprott and MFS is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Focus Trust and MFS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Municipal Income and Sprott Focus 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 Sprott Focus Trust 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 Income has no effect on the direction of Sprott Focus i.e., Sprott Focus and MFS Municipal go up and down completely randomly.
Pair Corralation between Sprott Focus and MFS Municipal
Given the investment horizon of 90 days Sprott Focus Trust is expected to generate 1.28 times more return on investment than MFS Municipal. However, Sprott Focus is 1.28 times more volatile than MFS Municipal Income. It trades about 0.15 of its potential returns per unit of risk. MFS Municipal Income is currently generating about -0.09 per unit of risk. If you would invest 765.00 in Sprott Focus Trust on August 26, 2024 and sell it today you would earn a total of 38.00 from holding Sprott Focus Trust or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Focus Trust vs. MFS Municipal Income
Performance |
| Timeline |
| Sprott Focus Trust |
| MFS Municipal Income |
Sprott Focus and MFS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Focus and MFS Municipal
The main advantage of trading using opposite Sprott Focus and MFS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Focus 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.| Sprott Focus vs. MFS Investment Grade | Sprott Focus vs. Invesco High Income | Sprott Focus vs. Eaton Vance National | Sprott Focus vs. Nuveen California Select |
| MFS Municipal vs. Eaton Vance National | MFS Municipal vs. Invesco High Income | MFS Municipal vs. Blackrock Muniholdings Ny | MFS Municipal vs. Nuveen California Select |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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