Correlation Between Mfs Municipal and Ab High
Can any of the company-specific risk be diversified away by investing in both Mfs Municipal and Ab High 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 Ab High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Municipal High and Ab High Income, you can compare the effects of market volatilities on Mfs Municipal and Ab High 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 Ab High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Municipal and Ab High.
Diversification Opportunities for Mfs Municipal and Ab High
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mfs and AGDAX is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Municipal High and Ab High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab High 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 High are associated (or correlated) with Ab High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab High Income has no effect on the direction of Mfs Municipal i.e., Mfs Municipal and Ab High go up and down completely randomly.
Pair Corralation between Mfs Municipal and Ab High
Assuming the 90 days horizon Mfs Municipal High is expected to generate 2.2 times more return on investment than Ab High. However, Mfs Municipal is 2.2 times more volatile than Ab High Income. It trades about 0.17 of its potential returns per unit of risk. Ab High Income is currently generating about 0.22 per unit of risk. If you would invest 756.00 in Mfs Municipal High on September 2, 2024 and sell it today you would earn a total of 9.00 from holding Mfs Municipal High or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Municipal High vs. Ab High Income
Performance |
| Timeline |
| Mfs Municipal High |
| Ab High Income |
Mfs Municipal and Ab High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Municipal and Ab High
The main advantage of trading using opposite Mfs Municipal and Ab High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Municipal position performs unexpectedly, Ab High 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 Ab High will offset losses from the drop in Ab High's long position.| Mfs Municipal vs. Ab High Income | Mfs Municipal vs. Federated Institutional High | Mfs Municipal vs. Strategic Allocation Aggressive | Mfs Municipal vs. Ab Global Risk |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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