Correlation Between Vanguard Energy and Mfs Municipal
Can any of the company-specific risk be diversified away by investing in both Vanguard Energy and Mfs Municipal 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 Vanguard Energy and Mfs Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Energy Index and Mfs Municipal High, you can compare the effects of market volatilities on Vanguard Energy and Mfs Municipal 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 Vanguard Energy with a short position of Mfs Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Energy and Mfs Municipal.
Diversification Opportunities for Vanguard Energy and Mfs Municipal
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and Mfs is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Energy Index and Mfs Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Municipal High and Vanguard Energy 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 Vanguard Energy Index are associated (or correlated) with Mfs Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Municipal High has no effect on the direction of Vanguard Energy i.e., Vanguard Energy and Mfs Municipal go up and down completely randomly.
Pair Corralation between Vanguard Energy and Mfs Municipal
Assuming the 90 days horizon Vanguard Energy Index is expected to generate 3.88 times more return on investment than Mfs Municipal. However, Vanguard Energy is 3.88 times more volatile than Mfs Municipal High. It trades about 0.05 of its potential returns per unit of risk. Mfs Municipal High is currently generating about 0.08 per unit of risk. If you would invest 5,395 in Vanguard Energy Index on October 24, 2024 and sell it today you would earn a total of 1,199 from holding Vanguard Energy Index or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Vanguard Energy Index vs. Mfs Municipal High
Performance |
| Timeline |
| Vanguard Energy Index |
| Mfs Municipal High |
Vanguard Energy and Mfs Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Energy and Mfs Municipal
The main advantage of trading using opposite Vanguard Energy and Mfs Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Energy position performs unexpectedly, Mfs Municipal 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 Municipal will offset losses from the drop in Mfs Municipal's long position.| Vanguard Energy vs. Vanguard Financials Index | Vanguard Energy vs. Vanguard Utilities Index | Vanguard Energy vs. Vanguard Materials Index | Vanguard Energy vs. Vanguard Sumer Staples |
| Mfs Municipal vs. Hennessy Bp Energy | Mfs Municipal vs. Blackrock All Cap Energy | Mfs Municipal vs. Vanguard Energy Index | Mfs Municipal vs. World Energy Fund |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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