Correlation Between Mfs Municipal and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Mfs Municipal and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs High, you can compare the effects of market volatilities on Mfs Municipal and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Municipal and Goldman Sachs.
Diversification Opportunities for Mfs Municipal and Goldman Sachs
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and Goldman is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Municipal High and Goldman Sachs High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs High 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs High has no effect on the direction of Mfs Municipal i.e., Mfs Municipal and Goldman Sachs go up and down completely randomly.
Pair Corralation between Mfs Municipal and Goldman Sachs
Assuming the 90 days horizon Mfs Municipal High is expected to generate 0.95 times more return on investment than Goldman Sachs. However, Mfs Municipal High is 1.05 times less risky than Goldman Sachs. It trades about 0.13 of its potential returns per unit of risk. Goldman Sachs High is currently generating about 0.11 per unit of risk. If you would invest 674.00 in Mfs Municipal High on August 30, 2024 and sell it today you would earn a total of 88.00 from holding Mfs Municipal High or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Municipal High vs. Goldman Sachs High
Performance |
| Timeline |
| Mfs Municipal High |
| Goldman Sachs High |
Mfs Municipal and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Municipal and Goldman Sachs
The main advantage of trading using opposite Mfs Municipal and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Municipal position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Mfs Municipal vs. Nuveen High Yield | Mfs Municipal vs. Nuveen High Yield | Mfs Municipal vs. Nuveen High Yield | Mfs Municipal vs. American High Income Municipal |
| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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