Correlation Between MFS Municipal and MFS Intermediate
Can any of the company-specific risk be diversified away by investing in both MFS Municipal and MFS Intermediate 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 MFS Intermediate 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 MFS Intermediate Income, you can compare the effects of market volatilities on MFS Municipal and MFS Intermediate 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 MFS Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Municipal and MFS Intermediate.
Diversification Opportunities for MFS Municipal and MFS Intermediate
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MFS and MFS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding MFS Municipal Income and MFS Intermediate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Intermediate Income 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 MFS Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Intermediate Income has no effect on the direction of MFS Municipal i.e., MFS Municipal and MFS Intermediate go up and down completely randomly.
Pair Corralation between MFS Municipal and MFS Intermediate
Considering the 90-day investment horizon MFS Municipal Income is expected to generate 0.88 times more return on investment than MFS Intermediate. However, MFS Municipal Income is 1.14 times less risky than MFS Intermediate. It trades about 0.11 of its potential returns per unit of risk. MFS Intermediate Income is currently generating about -0.02 per unit of risk. If you would invest 548.00 in MFS Municipal Income on August 28, 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Municipal Income vs. MFS Intermediate Income
Performance |
| Timeline |
| MFS Municipal Income |
| MFS Intermediate Income |
MFS Municipal and MFS Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Municipal and MFS Intermediate
The main advantage of trading using opposite MFS Municipal and MFS Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Municipal position performs unexpectedly, MFS Intermediate 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 Intermediate will offset losses from the drop in MFS Intermediate's long position.| MFS Municipal vs. PowerUp Acquisition Corp | MFS Municipal vs. Aurora Innovation | MFS Municipal vs. HUMANA INC | MFS Municipal vs. Aquagold International |
| MFS Intermediate vs. PowerUp Acquisition Corp | MFS Intermediate vs. Aurora Innovation | MFS Intermediate vs. HUMANA INC | MFS Intermediate vs. Aquagold International |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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