Correlation Between Western Asset and MFS Charter
Can any of the company-specific risk be diversified away by investing in both Western Asset and MFS Charter 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 Western Asset and MFS Charter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and MFS Charter Income, you can compare the effects of market volatilities on Western Asset and MFS Charter 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 Western Asset with a short position of MFS Charter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and MFS Charter.
Diversification Opportunities for Western Asset and MFS Charter
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and MFS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and MFS Charter Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Charter Income and Western Asset 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 Western Asset High are associated (or correlated) with MFS Charter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Charter Income has no effect on the direction of Western Asset i.e., Western Asset and MFS Charter go up and down completely randomly.
Pair Corralation between Western Asset and MFS Charter
Considering the 90-day investment horizon Western Asset High is expected to generate 1.72 times more return on investment than MFS Charter. However, Western Asset is 1.72 times more volatile than MFS Charter Income. It trades about 0.08 of its potential returns per unit of risk. MFS Charter Income is currently generating about 0.0 per unit of risk. If you would invest 390.00 in Western Asset High on August 30, 2024 and sell it today you would earn a total of 5.00 from holding Western Asset High or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. MFS Charter Income
Performance |
| Timeline |
| Western Asset High |
| MFS Charter Income |
Western Asset and MFS Charter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and MFS Charter
The main advantage of trading using opposite Western Asset and MFS Charter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, MFS Charter 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 Charter will offset losses from the drop in MFS Charter's long position.| Western Asset vs. Western Asset Global | Western Asset vs. Western Asset Global | Western Asset vs. European Equity Closed | Western Asset vs. Western Asset High |
| MFS Charter vs. MFS High Income | MFS Charter vs. MFS Investment Grade | MFS Charter vs. Eaton Vance National | MFS Charter vs. Invesco High Income |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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