Correlation Between Mfs Growth and Western Asset
Can any of the company-specific risk be diversified away by investing in both Mfs Growth and Western Asset 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 Growth and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Growth Fund and Western Asset Municipal, you can compare the effects of market volatilities on Mfs Growth and Western Asset 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 Growth with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Growth and Western Asset.
Diversification Opportunities for Mfs Growth and Western Asset
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mfs and Western is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Growth Fund and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and Mfs Growth 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 Growth Fund are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Municipal has no effect on the direction of Mfs Growth i.e., Mfs Growth and Western Asset go up and down completely randomly.
Pair Corralation between Mfs Growth and Western Asset
Assuming the 90 days horizon Mfs Growth Fund is expected to generate 3.93 times more return on investment than Western Asset. However, Mfs Growth is 3.93 times more volatile than Western Asset Municipal. It trades about 0.09 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.01 per unit of risk. If you would invest 9,540 in Mfs Growth Fund on September 3, 2024 and sell it today you would earn a total of 5,521 from holding Mfs Growth Fund or generate 57.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Growth Fund vs. Western Asset Municipal
Performance |
| Timeline |
| Mfs Growth Fund |
| Western Asset Municipal |
Mfs Growth and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Growth and Western Asset
The main advantage of trading using opposite Mfs Growth and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Growth position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Mfs Growth vs. Small Cap Stock | Mfs Growth vs. Vanguard Windsor Fund | Mfs Growth vs. Qs Growth Fund | Mfs Growth vs. Issachar Fund Class |
| Western Asset vs. Columbia Real Estate | Western Asset vs. Prudential Real Estate | Western Asset vs. Us Real Estate | Western Asset vs. Guggenheim Risk Managed |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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