Correlation Between MFS Government and MFS Multimarket
Can any of the company-specific risk be diversified away by investing in both MFS Government and MFS Multimarket 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 Multimarket 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 Multimarket Income, you can compare the effects of market volatilities on MFS Government and MFS Multimarket 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 Multimarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Government and MFS Multimarket.
Diversification Opportunities for MFS Government and MFS Multimarket
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MFS and MFS is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MFS Government Markets and MFS Multimarket Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Multimarket Income 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 Multimarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Multimarket Income has no effect on the direction of MFS Government i.e., MFS Government and MFS Multimarket go up and down completely randomly.
Pair Corralation between MFS Government and MFS Multimarket
Considering the 90-day investment horizon MFS Government is expected to generate 2.06 times less return on investment than MFS Multimarket. In addition to that, MFS Government is 1.24 times more volatile than MFS Multimarket Income. It trades about 0.03 of its total potential returns per unit of risk. MFS Multimarket Income is currently generating about 0.09 per unit of volatility. If you would invest 395.00 in MFS Multimarket Income on August 31, 2024 and sell it today you would earn a total of 76.00 from holding MFS Multimarket Income or generate 19.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Government Markets vs. MFS Multimarket Income
Performance |
| Timeline |
| MFS Government Markets |
| MFS Multimarket Income |
MFS Government and MFS Multimarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Government and MFS Multimarket
The main advantage of trading using opposite MFS Government and MFS Multimarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Government position performs unexpectedly, MFS Multimarket 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 Multimarket will offset losses from the drop in MFS Multimarket'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 Multimarket vs. MFS High Yield | MFS Multimarket vs. MFS High Income | MFS Multimarket vs. MFS Intermediate Income | MFS Multimarket vs. Blackrock Muniholdings Quality |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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