Correlation Between MFS Municipal and Bancroft Fund
Can any of the company-specific risk be diversified away by investing in both MFS Municipal and Bancroft Fund 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 Municipal and Bancroft Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFS Municipal Income and Bancroft Fund Limited, you can compare the effects of market volatilities on MFS Municipal and Bancroft Fund 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 Municipal with a short position of Bancroft Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Municipal and Bancroft Fund.
Diversification Opportunities for MFS Municipal and Bancroft Fund
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between MFS and Bancroft is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding MFS Municipal Income and Bancroft Fund Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancroft Fund Limited and MFS Municipal 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 Municipal Income are associated (or correlated) with Bancroft Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancroft Fund Limited has no effect on the direction of MFS Municipal i.e., MFS Municipal and Bancroft Fund go up and down completely randomly.
Pair Corralation between MFS Municipal and Bancroft Fund
Considering the 90-day investment horizon MFS Municipal is expected to generate 5.34 times less return on investment than Bancroft Fund. But when comparing it to its historical volatility, MFS Municipal Income is 1.13 times less risky than Bancroft Fund. It trades about 0.08 of its potential returns per unit of risk. Bancroft Fund Limited is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,564 in Bancroft Fund Limited on September 2, 2024 and sell it today you would earn a total of 283.00 from holding Bancroft Fund Limited or generate 18.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Municipal Income vs. Bancroft Fund Limited
Performance |
| Timeline |
| MFS Municipal Income |
| Bancroft Fund Limited |
MFS Municipal and Bancroft Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Municipal and Bancroft Fund
The main advantage of trading using opposite MFS Municipal and Bancroft Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Municipal position performs unexpectedly, Bancroft Fund 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 Bancroft Fund will offset losses from the drop in Bancroft Fund's long position.| MFS Municipal vs. Visa Class A | MFS Municipal vs. Diamond Hill Investment | MFS Municipal vs. Distoken Acquisition | MFS Municipal vs. Associated Capital Group |
| Bancroft Fund vs. GAMCO Natural Resources | Bancroft Fund vs. RiverNorth Flexible Municipalome | Bancroft Fund vs. Brandywineglobal Globalome Opportunities | Bancroft Fund vs. Ameritrans Capital Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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