Correlation Between Mfs Municipal and Nuveen Municipal
Can any of the company-specific risk be diversified away by investing in both Mfs Municipal and Nuveen 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 Mfs Municipal and Nuveen Municipal 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 Nuveen Municipal High, you can compare the effects of market volatilities on Mfs Municipal and Nuveen 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 Mfs Municipal with a short position of Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Municipal and Nuveen Municipal.
Diversification Opportunities for Mfs Municipal and Nuveen Municipal
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and Nuveen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Municipal Income and Nuveen Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal High 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 Nuveen Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Municipal High has no effect on the direction of Mfs Municipal i.e., Mfs Municipal and Nuveen Municipal go up and down completely randomly.
Pair Corralation between Mfs Municipal and Nuveen Municipal
Assuming the 90 days horizon Mfs Municipal Income is expected to generate 0.85 times more return on investment than Nuveen Municipal. However, Mfs Municipal Income is 1.17 times less risky than Nuveen Municipal. It trades about 0.07 of its potential returns per unit of risk. Nuveen Municipal High is currently generating about 0.05 per unit of risk. If you would invest 589.00 in Mfs Municipal Income on September 2, 2024 and sell it today you would earn a total of 38.00 from holding Mfs Municipal Income or generate 6.45% 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. Nuveen Municipal High
Performance |
| Timeline |
| Mfs Municipal Income |
| Nuveen Municipal High |
Mfs Municipal and Nuveen Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Municipal and Nuveen Municipal
The main advantage of trading using opposite Mfs Municipal and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Municipal position performs unexpectedly, Nuveen 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 Nuveen Municipal will offset losses from the drop in Nuveen Municipal'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 |
| Nuveen Municipal vs. Aqr Diversified Arbitrage | Nuveen Municipal vs. Tiaa Cref Smallmid Cap Equity | Nuveen Municipal vs. Adams Diversified Equity | Nuveen Municipal vs. Small Cap Stock |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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