Correlation Between Western Asset and Mfs Utilities
Can any of the company-specific risk be diversified away by investing in both Western Asset and Mfs Utilities 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 Utilities 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 Utilities Fund, you can compare the effects of market volatilities on Western Asset and Mfs Utilities 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 Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Mfs Utilities.
Diversification Opportunities for Western Asset and Mfs Utilities
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Mfs is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities 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 Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Western Asset i.e., Western Asset and Mfs Utilities go up and down completely randomly.
Pair Corralation between Western Asset and Mfs Utilities
Assuming the 90 days horizon Western Asset is expected to generate 17.03 times less return on investment than Mfs Utilities. But when comparing it to its historical volatility, Western Asset Municipal is 3.31 times less risky than Mfs Utilities. It trades about 0.02 of its potential returns per unit of risk. Mfs Utilities Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,156 in Mfs Utilities Fund on September 5, 2024 and sell it today you would earn a total of 277.00 from holding Mfs Utilities Fund or generate 12.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Western Asset Municipal vs. Mfs Utilities Fund
Performance |
| Timeline |
| Western Asset Municipal |
| Mfs Utilities |
Western Asset and Mfs Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Mfs Utilities
The main advantage of trading using opposite Western Asset and Mfs Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Mfs Utilities 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 Utilities will offset losses from the drop in Mfs Utilities' long position.| Western Asset vs. Sei Daily Income | Western Asset vs. Iaadx | Western Asset vs. Rbc Microcap Value | Western Asset vs. Falcon Focus Scv |
| Mfs Utilities vs. Dominion Energy | Mfs Utilities vs. Atlantica Sustainable Infrastructure | Mfs Utilities vs. Consolidated Edison | Mfs Utilities vs. Eversource Energy |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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