Correlation Between MFS Charter and MFS Investment

Can any of the company-specific risk be diversified away by investing in both MFS Charter and MFS Investment 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 Charter and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MFS Charter Income and MFS Investment Grade, you can compare the effects of market volatilities on MFS Charter and MFS Investment 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 Charter with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Charter and MFS Investment.

Diversification Opportunities for MFS Charter and MFS Investment

-0.22

Correlation Coefficient

MFS Charter  MFS Investment

Very good diversification

The 3 months correlation between MFS and MFS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding MFS Charter Income and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade and MFS Charter 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 Charter Income are associated (or correlated) with MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of MFS Charter i.e., MFS Charter and MFS Investment go up and down completely randomly.

Pair Corralation between MFS Charter and MFS Investment

Considering the 90-day investment horizon MFS Charter Income is expected to generate 0.75 times more return on investment than MFS Investment. However, MFS Charter Income is 1.33 times less risky than MFS Investment. It trades about 0.18 of its potential returns per unit of risk. MFS Investment Grade is currently generating about -0.03 per unit of risk. If you would invest  617.00  in MFS Charter Income on May 10, 2025 and sell it today you would earn a total of  21.00  from holding MFS Charter Income or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MFS Charter Income  vs.  MFS Investment Grade

MFS Charter Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Charter Income are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, MFS Charter is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

MFS Investment Grade

Risk-Adjusted Performance

Weakest

Over the last 90 days MFS Investment Grade has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, MFS Investment is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with MFS Charter and MFS Investment

The main advantage of trading using opposite MFS Charter and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Charter position performs unexpectedly, MFS Investment 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 Investment will offset losses from the drop in MFS Investment's long position.

The idea behind MFS Charter Income and MFS Investment Grade pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.