Correlation Between Newtek Business and MFS Investment
Can any of the company-specific risk be diversified away by investing in both Newtek Business 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 Newtek Business and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newtek Business Services and MFS Investment Grade, you can compare the effects of market volatilities on Newtek Business 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 Newtek Business with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newtek Business and MFS Investment.
Diversification Opportunities for Newtek Business and MFS Investment
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Newtek and MFS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Newtek Business Services 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 Newtek Business 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 Newtek Business Services 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 Newtek Business i.e., Newtek Business and MFS Investment go up and down completely randomly.
Pair Corralation between Newtek Business and MFS Investment
Assuming the 90 days horizon Newtek Business is expected to generate 1.45 times less return on investment than MFS Investment. But when comparing it to its historical volatility, Newtek Business Services is 1.16 times less risky than MFS Investment. It trades about 0.06 of its potential returns per unit of risk. MFS Investment Grade is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 686.00 in MFS Investment Grade on September 2, 2024 and sell it today you would earn a total of 138.00 from holding MFS Investment Grade or generate 20.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newtek Business Services vs. MFS Investment Grade
Performance |
| Timeline |
| Newtek Business Services |
| MFS Investment Grade |
Newtek Business and MFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newtek Business and MFS Investment
The main advantage of trading using opposite Newtek Business and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newtek Business 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.The idea behind Newtek Business Services and MFS Investment Grade pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MFS Investment vs. Invesco High Income | MFS Investment vs. Eaton Vance National | MFS Investment vs. Nuveen California Select | MFS Investment vs. Federated Premier Municipal |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| CEOs Directory Screen CEOs from public companies around the world |