Correlation Between MFS Government and MFS Investment
Can any of the company-specific risk be diversified away by investing in both MFS Government and MFS Investment 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 Government and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFS Government Markets and MFS Investment Grade, you can compare the effects of market volatilities on MFS Government and MFS Investment 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 Government with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Government and MFS Investment.
Diversification Opportunities for MFS Government and MFS Investment
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MFS and MFS is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MFS Government Markets and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade and MFS Government 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 Government Markets are associated (or correlated) with MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of MFS Government i.e., MFS Government and MFS Investment go up and down completely randomly.
Pair Corralation between MFS Government and MFS Investment
Considering the 90-day investment horizon MFS Government Markets is expected to under-perform the MFS Investment. In addition to that, MFS Government is 1.18 times more volatile than MFS Investment Grade. It trades about -0.11 of its total potential returns per unit of risk. MFS Investment Grade is currently generating about 0.11 per unit of volatility. If you would invest 803.00 in MFS Investment Grade on August 28, 2024 and sell it today you would earn a total of 10.00 from holding MFS Investment Grade or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Government Markets vs. MFS Investment Grade
Performance |
| Timeline |
| MFS Government Markets |
| MFS Investment Grade |
MFS Government and MFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Government and MFS Investment
The main advantage of trading using opposite MFS Government and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Government position performs unexpectedly, MFS Investment 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 Investment will offset losses from the drop in MFS Investment's long position.| MFS Government vs. MFS Investment Grade | MFS Government vs. Invesco High Income | MFS Government vs. Eaton Vance National | MFS Government vs. Nuveen California Select |
| MFS Investment vs. PowerUp Acquisition Corp | MFS Investment vs. Aurora Innovation | MFS Investment vs. HUMANA INC | MFS Investment 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |