Correlation Between AIM ETF and MFS Government
Can any of the company-specific risk be diversified away by investing in both AIM ETF and MFS Government 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 AIM ETF and MFS Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIM ETF Products and MFS Government Markets, you can compare the effects of market volatilities on AIM ETF and MFS Government 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 AIM ETF with a short position of MFS Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM ETF and MFS Government.
Diversification Opportunities for AIM ETF and MFS Government
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AIM and MFS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products and MFS Government Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Government Markets and AIM ETF 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 AIM ETF Products are associated (or correlated) with MFS Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Government Markets has no effect on the direction of AIM ETF i.e., AIM ETF and MFS Government go up and down completely randomly.
Pair Corralation between AIM ETF and MFS Government
Given the investment horizon of 90 days AIM ETF Products is expected to generate 0.34 times more return on investment than MFS Government. However, AIM ETF Products is 2.96 times less risky than MFS Government. It trades about 0.27 of its potential returns per unit of risk. MFS Government Markets is currently generating about -0.16 per unit of risk. If you would invest 3,531 in AIM ETF Products on August 24, 2024 and sell it today you would earn a total of 45.00 from holding AIM ETF Products or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIM ETF Products vs. MFS Government Markets
Performance |
| Timeline |
| AIM ETF Products |
| MFS Government Markets |
AIM ETF and MFS Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIM ETF and MFS Government
The main advantage of trading using opposite AIM ETF and MFS Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIM ETF position performs unexpectedly, MFS Government 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 Government will offset losses from the drop in MFS Government's long position.The idea behind AIM ETF Products and MFS Government Markets 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.| MFS Government vs. MFS Investment Grade | MFS Government vs. Invesco High Income | MFS Government vs. Eaton Vance National | MFS Government 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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