Correlation Between Western Asset and MFS Investment
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Premier and MFS Investment Grade, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and MFS Investment.
Diversification Opportunities for Western Asset and MFS Investment
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and MFS is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Premier 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 Western Asset 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 Western Asset Premier 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 Western Asset i.e., Western Asset and MFS Investment go up and down completely randomly.
Pair Corralation between Western Asset and MFS Investment
Considering the 90-day investment horizon Western Asset is expected to generate 1.09 times less return on investment than MFS Investment. In addition to that, Western Asset is 1.41 times more volatile than MFS Investment Grade. It trades about 0.05 of its total potential returns per unit of risk. MFS Investment Grade is currently generating about 0.08 per unit of volatility. If you would invest 689.00 in MFS Investment Grade on September 1, 2024 and sell it today you would earn a total of 135.00 from holding MFS Investment Grade or generate 19.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Premier vs. MFS Investment Grade
Performance |
| Timeline |
| Western Asset Premier |
| MFS Investment Grade |
Western Asset and MFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and MFS Investment
The main advantage of trading using opposite Western Asset and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. MFS Investment Grade | Western Asset vs. Platinum Asia Investments | Western Asset vs. Pimco New York | Western Asset vs. Invesco Pennsylvania Value |
| MFS Investment vs. Visa Class A | MFS Investment vs. Diamond Hill Investment | MFS Investment vs. Distoken Acquisition | MFS Investment vs. Associated Capital Group |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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