Correlation Between Investec Global and Mfs Municipal
Can any of the company-specific risk be diversified away by investing in both Investec Global and Mfs 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 Investec Global and Mfs Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Global Franchise and Mfs Municipal Limited, you can compare the effects of market volatilities on Investec Global and Mfs 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 Investec Global with a short position of Mfs Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Global and Mfs Municipal.
Diversification Opportunities for Investec Global and Mfs Municipal
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Investec and Mfs is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Investec Global Franchise and Mfs Municipal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Municipal Limited and Investec Global 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 Investec Global Franchise are associated (or correlated) with Mfs Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Municipal Limited has no effect on the direction of Investec Global i.e., Investec Global and Mfs Municipal go up and down completely randomly.
Pair Corralation between Investec Global and Mfs Municipal
Assuming the 90 days horizon Investec Global Franchise is expected to generate 6.23 times more return on investment than Mfs Municipal. However, Investec Global is 6.23 times more volatile than Mfs Municipal Limited. It trades about 0.01 of its potential returns per unit of risk. Mfs Municipal Limited is currently generating about -0.06 per unit of risk. If you would invest 1,767 in Investec Global Franchise on October 9, 2024 and sell it today you would earn a total of 1.00 from holding Investec Global Franchise or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Global Franchise vs. Mfs Municipal Limited
Performance |
| Timeline |
| Investec Global Franchise |
| Mfs Municipal Limited |
Investec Global and Mfs Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Global and Mfs Municipal
The main advantage of trading using opposite Investec Global and Mfs Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Global position performs unexpectedly, Mfs 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 Mfs Municipal will offset losses from the drop in Mfs Municipal's long position.| Investec Global vs. Vy Franklin Income | Investec Global vs. Ab Impact Municipal | Investec Global vs. Qs Large Cap | Investec Global vs. Kirr Marbach Partners |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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