Correlation Between California Bond and Mfs Government
Can any of the company-specific risk be diversified away by investing in both California Bond and Mfs Government 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 California Bond and Mfs Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Bond Fund and Mfs Government Securities, you can compare the effects of market volatilities on California Bond and Mfs Government 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 California Bond with a short position of Mfs Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Mfs Government.
Diversification Opportunities for California Bond and Mfs Government
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between California and Mfs is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Mfs Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Government Securities and California Bond 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 California Bond Fund are associated (or correlated) with Mfs Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Government Securities has no effect on the direction of California Bond i.e., California Bond and Mfs Government go up and down completely randomly.
Pair Corralation between California Bond and Mfs Government
Assuming the 90 days horizon California Bond Fund is expected to generate 0.61 times more return on investment than Mfs Government. However, California Bond Fund is 1.63 times less risky than Mfs Government. It trades about 0.07 of its potential returns per unit of risk. Mfs Government Securities is currently generating about 0.02 per unit of risk. If you would invest 964.00 in California Bond Fund on August 30, 2024 and sell it today you would earn a total of 87.00 from holding California Bond Fund or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Mfs Government Securities
Performance |
| Timeline |
| California Bond |
| Mfs Government Securities |
California Bond and Mfs Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Mfs Government
The main advantage of trading using opposite California Bond and Mfs Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Mfs Government 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 Government will offset losses from the drop in Mfs Government's long position.| California Bond vs. HUMANA INC | California Bond vs. Aquagold International | California Bond vs. Barloworld Ltd ADR | California Bond vs. Morningstar Unconstrained Allocation |
| Mfs Government vs. T Rowe Price | Mfs Government vs. California Bond Fund | Mfs Government vs. Blrc Sgy Mnp | Mfs Government vs. Transamerica Funds |
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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