Correlation Between MFS Municipal and First Trust
Can any of the company-specific risk be diversified away by investing in both MFS Municipal and First Trust 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 First Trust 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 First Trust Energy, you can compare the effects of market volatilities on MFS Municipal and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Municipal and First Trust.
Diversification Opportunities for MFS Municipal and First Trust
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MFS and First is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding MFS Municipal Income and First Trust Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Energy 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Energy has no effect on the direction of MFS Municipal i.e., MFS Municipal and First Trust go up and down completely randomly.
Pair Corralation between MFS Municipal and First Trust
If you would invest 548.00 in MFS Municipal Income on August 27, 2024 and sell it today you would earn a total of 8.00 from holding MFS Municipal Income or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
MFS Municipal Income vs. First Trust Energy
Performance |
| Timeline |
| MFS Municipal Income |
| First Trust Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MFS Municipal and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Municipal and First Trust
The main advantage of trading using opposite MFS Municipal and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Municipal position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| MFS Municipal vs. PowerUp Acquisition Corp | MFS Municipal vs. Aurora Innovation | MFS Municipal vs. HUMANA INC | MFS Municipal vs. Aquagold International |
| First Trust vs. Eagle Point Income | First Trust vs. European Equity Closed | First Trust vs. John Hancock Income | First Trust vs. First Trust Intermediate |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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