Correlation Between Guidepath(r) Managed and Mfs Municipal
Can any of the company-specific risk be diversified away by investing in both Guidepath(r) Managed 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 Guidepath(r) Managed and Mfs Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidepath Managed Futures and Mfs Municipal High, you can compare the effects of market volatilities on Guidepath(r) Managed 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 Guidepath(r) Managed with a short position of Mfs Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath(r) Managed and Mfs Municipal.
Diversification Opportunities for Guidepath(r) Managed and Mfs Municipal
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Guidepath(r) and Mfs is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Mfs Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Municipal High and Guidepath(r) Managed 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 Guidepath Managed Futures 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 High has no effect on the direction of Guidepath(r) Managed i.e., Guidepath(r) Managed and Mfs Municipal go up and down completely randomly.
Pair Corralation between Guidepath(r) Managed and Mfs Municipal
Assuming the 90 days horizon Guidepath Managed Futures is expected to generate 1.65 times more return on investment than Mfs Municipal. However, Guidepath(r) Managed is 1.65 times more volatile than Mfs Municipal High. It trades about 0.2 of its potential returns per unit of risk. Mfs Municipal High is currently generating about 0.15 per unit of risk. If you would invest 769.00 in Guidepath Managed Futures on September 4, 2024 and sell it today you would earn a total of 18.00 from holding Guidepath Managed Futures or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidepath Managed Futures vs. Mfs Municipal High
Performance |
| Timeline |
| Guidepath Managed Futures |
| Mfs Municipal High |
Guidepath(r) Managed and Mfs Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidepath(r) Managed and Mfs Municipal
The main advantage of trading using opposite Guidepath(r) Managed and Mfs Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidepath(r) Managed 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.The idea behind Guidepath Managed Futures and Mfs Municipal High pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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