Correlation Between Mfs Corporate and Vanguard Intermediate-ter
Can any of the company-specific risk be diversified away by investing in both Mfs Corporate and Vanguard Intermediate-ter 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 Mfs Corporate and Vanguard Intermediate-ter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Porate Bond and Vanguard Intermediate Term Investment Grade, you can compare the effects of market volatilities on Mfs Corporate and Vanguard Intermediate-ter 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 Mfs Corporate with a short position of Vanguard Intermediate-ter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Corporate and Vanguard Intermediate-ter.
Diversification Opportunities for Mfs Corporate and Vanguard Intermediate-ter
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Mfs and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Porate Bond and Vanguard Intermediate Term Inv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate-ter and Mfs Corporate 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 Mfs Porate Bond are associated (or correlated) with Vanguard Intermediate-ter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate-ter has no effect on the direction of Mfs Corporate i.e., Mfs Corporate and Vanguard Intermediate-ter go up and down completely randomly.
Pair Corralation between Mfs Corporate and Vanguard Intermediate-ter
Assuming the 90 days horizon Mfs Corporate is expected to generate 1.08 times less return on investment than Vanguard Intermediate-ter. But when comparing it to its historical volatility, Mfs Porate Bond is 1.01 times less risky than Vanguard Intermediate-ter. It trades about 0.05 of its potential returns per unit of risk. Vanguard Intermediate Term Investment Grade is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 785.00 in Vanguard Intermediate Term Investment Grade on September 3, 2024 and sell it today you would earn a total of 89.00 from holding Vanguard Intermediate Term Investment Grade or generate 11.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Porate Bond vs. Vanguard Intermediate Term Inv
Performance |
| Timeline |
| Mfs Porate Bond |
| Vanguard Intermediate-ter |
Mfs Corporate and Vanguard Intermediate-ter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Corporate and Vanguard Intermediate-ter
The main advantage of trading using opposite Mfs Corporate and Vanguard Intermediate-ter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Corporate position performs unexpectedly, Vanguard Intermediate-ter 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 Vanguard Intermediate-ter will offset losses from the drop in Vanguard Intermediate-ter's long position.The idea behind Mfs Porate Bond and Vanguard Intermediate Term Investment Grade 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.
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |