Correlation Between Western Asset and Mfs Massachusetts
Can any of the company-specific risk be diversified away by investing in both Western Asset and Mfs Massachusetts 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 Massachusetts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Mfs Massachusetts Municipal, you can compare the effects of market volatilities on Western Asset and Mfs Massachusetts 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 Massachusetts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Mfs Massachusetts.
Diversification Opportunities for Western Asset and Mfs Massachusetts
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Mfs is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Mfs Massachusetts Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Massachusetts 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 Municipal are associated (or correlated) with Mfs Massachusetts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Massachusetts has no effect on the direction of Western Asset i.e., Western Asset and Mfs Massachusetts go up and down completely randomly.
Pair Corralation between Western Asset and Mfs Massachusetts
Assuming the 90 days horizon Western Asset Municipal is expected to generate 1.75 times more return on investment than Mfs Massachusetts. However, Western Asset is 1.75 times more volatile than Mfs Massachusetts Municipal. It trades about 0.23 of its potential returns per unit of risk. Mfs Massachusetts Municipal is currently generating about 0.38 per unit of risk. If you would invest 725.00 in Western Asset Municipal on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Western Asset Municipal or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset Municipal vs. Mfs Massachusetts Municipal
Performance |
| Timeline |
| Western Asset Municipal |
| Mfs Massachusetts |
Western Asset and Mfs Massachusetts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Mfs Massachusetts
The main advantage of trading using opposite Western Asset and Mfs Massachusetts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Mfs Massachusetts 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 Massachusetts will offset losses from the drop in Mfs Massachusetts' long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Mfs Massachusetts vs. Fidelity Advisor Financial | Mfs Massachusetts vs. Goldman Sachs Financial | Mfs Massachusetts vs. Gabelli Global Financial | Mfs Massachusetts vs. Prudential Jennison Financial |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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