Correlation Between Mfs Municipal and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both Mfs Municipal and Bny Mellon 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 Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Municipal Income and Bny Mellon Strategic, you can compare the effects of market volatilities on Mfs Municipal and Bny Mellon 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 Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Municipal and Bny Mellon.
Diversification Opportunities for Mfs Municipal and Bny Mellon
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and Bny is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Municipal Income and Bny Mellon Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Strategic 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 Income are associated (or correlated) with Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Strategic has no effect on the direction of Mfs Municipal i.e., Mfs Municipal and Bny Mellon go up and down completely randomly.
Pair Corralation between Mfs Municipal and Bny Mellon
Assuming the 90 days horizon Mfs Municipal is expected to generate 2.81 times less return on investment than Bny Mellon. But when comparing it to its historical volatility, Mfs Municipal Income is 1.74 times less risky than Bny Mellon. It trades about 0.03 of its potential returns per unit of risk. Bny Mellon Strategic is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 538.00 in Bny Mellon Strategic on September 2, 2024 and sell it today you would earn a total of 76.00 from holding Bny Mellon Strategic or generate 14.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Municipal Income vs. Bny Mellon Strategic
Performance |
| Timeline |
| Mfs Municipal Income |
| Bny Mellon Strategic |
Mfs Municipal and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Municipal and Bny Mellon
The main advantage of trading using opposite Mfs Municipal and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Municipal position performs unexpectedly, Bny Mellon 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 Bny Mellon will offset losses from the drop in Bny Mellon's long position.| Mfs Municipal vs. Vanguard Total Stock | Mfs Municipal vs. Vanguard 500 Index | Mfs Municipal vs. Vanguard Total Stock | Mfs Municipal vs. Vanguard Total Stock |
| Bny Mellon vs. Western Asset Managed | Bny Mellon vs. Blackrock Muniholdings Quality | Bny Mellon vs. DTF Tax Free | Bny Mellon vs. John Hancock Income |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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