Correlation Between Goldman Sachs and MFS Municipal
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs 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 Goldman Sachs and MFS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Group and MFS Municipal Income, you can compare the effects of market volatilities on Goldman Sachs 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 Goldman Sachs with a short position of MFS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and MFS Municipal.
Diversification Opportunities for Goldman Sachs and MFS Municipal
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldman and MFS is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group 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 Goldman Sachs 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 Goldman Sachs Group 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 Goldman Sachs i.e., Goldman Sachs and MFS Municipal go up and down completely randomly.
Pair Corralation between Goldman Sachs and MFS Municipal
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 5.14 times more return on investment than MFS Municipal. However, Goldman Sachs is 5.14 times more volatile than MFS Municipal Income. It trades about 0.21 of its potential returns per unit of risk. MFS Municipal Income is currently generating about 0.02 per unit of risk. If you would invest 51,720 in Goldman Sachs Group on August 24, 2024 and sell it today you would earn a total of 7,891 from holding Goldman Sachs Group or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. MFS Municipal Income
Performance |
| Timeline |
| Goldman Sachs Group |
| MFS Municipal Income |
Goldman Sachs and MFS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and MFS Municipal
The main advantage of trading using opposite Goldman Sachs and MFS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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.| Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup | Goldman Sachs vs. American Express |
| MFS Municipal vs. Invesco High Income | MFS Municipal vs. Blackrock Muniholdings Ny | MFS Municipal vs. Nuveen California Select | MFS Municipal vs. MFS Investment Grade |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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