Correlation Between MFS Intermediate and MFS Government

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

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

Diversification Opportunities for MFS Intermediate and MFS Government

0.64

Correlation Coefficient

MFS Intermediate  MFS Government

Poor diversification

The 3 months correlation between MFS and MFS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MFS Intermediate Income and MFS Government Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Government Markets and MFS Intermediate 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 Intermediate Income are associated (or correlated) with MFS Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Government Markets has no effect on the direction of MFS Intermediate i.e., MFS Intermediate and MFS Government go up and down completely randomly.

Pair Corralation between MFS Intermediate and MFS Government

Considering the 90-day investment horizon MFS Intermediate Income is expected to generate 0.9 times more return on investment than MFS Government. However, MFS Intermediate Income is 1.11 times less risky than MFS Government. It trades about 0.1 of its potential returns per unit of risk. MFS Government Markets is currently generating about 0.08 per unit of risk. If you would invest  263.00  in MFS Intermediate Income on May 10, 2025 and sell it today you would earn a total of  9.00  from holding MFS Intermediate Income or generate 3.42% return on investment over 90 days.

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

MFS Intermediate Income  vs.  MFS Government Markets

MFS Intermediate Income

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Intermediate Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, MFS Intermediate is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

MFS Government Markets

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Government Markets are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, MFS Government is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MFS Intermediate and MFS Government

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

The idea behind MFS Intermediate Income and MFS Government Markets 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.