Correlation Between Mfs Porate and Investment Grade
Can any of the company-specific risk be diversified away by investing in both Mfs Porate and Investment Grade 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 Porate and Investment Grade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Porate Bond and Investment Grade Porate, you can compare the effects of market volatilities on Mfs Porate and Investment Grade 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 Porate with a short position of Investment Grade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Porate and Investment Grade.
Diversification Opportunities for Mfs Porate and Investment Grade
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mfs and Investment is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Porate Bond and Investment Grade Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Grade Porate and Mfs Porate 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 Porate Bond are associated (or correlated) with Investment Grade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Grade Porate has no effect on the direction of Mfs Porate i.e., Mfs Porate and Investment Grade go up and down completely randomly.
Pair Corralation between Mfs Porate and Investment Grade
Assuming the 90 days horizon Mfs Porate Bond is expected to generate 1.05 times more return on investment than Investment Grade. However, Mfs Porate is 1.05 times more volatile than Investment Grade Porate. It trades about -0.19 of its potential returns per unit of risk. Investment Grade Porate is currently generating about -0.22 per unit of risk. If you would invest 1,218 in Mfs Porate Bond on January 20, 2024 and sell it today you would lose (21.00) from holding Mfs Porate Bond or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Porate Bond vs. Investment Grade Porate
Performance |
| Timeline |
| Mfs Porate Bond |
| Investment Grade Porate |
Mfs Porate and Investment Grade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Porate and Investment Grade
The main advantage of trading using opposite Mfs Porate and Investment Grade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Porate position performs unexpectedly, Investment Grade 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 Investment Grade will offset losses from the drop in Investment Grade's long position.| Mfs Porate vs. Mfs Prudent Investor | Mfs Porate vs. Mfs Prudent Investor | Mfs Porate vs. Mfs Prudent Investor | Mfs Porate vs. Mfs Prudent Investor |
| Investment Grade vs. Pimco Rae Worldwide | Investment Grade vs. Pimco Rae Worldwide | Investment Grade vs. Pimco Rae Worldwide | Investment Grade vs. Pimco Rae Worldwide |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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