Correlation Between MFS Multimarket and MFS Government
Can any of the company-specific risk be diversified away by investing in both MFS Multimarket 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 Multimarket 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 Multimarket Income and MFS Government Markets, you can compare the effects of market volatilities on MFS Multimarket 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 Multimarket with a short position of MFS Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Multimarket and MFS Government.
Diversification Opportunities for MFS Multimarket and MFS Government
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MFS and MFS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MFS Multimarket 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 Multimarket 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 Multimarket 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 Multimarket i.e., MFS Multimarket and MFS Government go up and down completely randomly.
Pair Corralation between MFS Multimarket and MFS Government
Considering the 90-day investment horizon MFS Multimarket Income is expected to generate 0.5 times more return on investment than MFS Government. However, MFS Multimarket Income is 2.0 times less risky than MFS Government. It trades about 0.13 of its potential returns per unit of risk. MFS Government Markets is currently generating about 0.0 per unit of risk. If you would invest 451.00 in MFS Multimarket Income on April 30, 2025 and sell it today you would earn a total of 12.00 from holding MFS Multimarket Income or generate 2.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
MFS Multimarket Income vs. MFS Government Markets
Performance |
Timeline |
MFS Multimarket Income |
MFS Government Markets |
MFS Multimarket and MFS Government Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MFS Multimarket and MFS Government
The main advantage of trading using opposite MFS Multimarket and MFS Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Multimarket 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.MFS Multimarket vs. MFS Intermediate Income | MFS Multimarket vs. MFS Charter Income | MFS Multimarket vs. MFS High Income | MFS Multimarket vs. MFS High Yield |
MFS Government vs. MFS Investment Grade | MFS Government vs. MFS High Yield | MFS Government vs. MFS High Income | MFS Government vs. MFS Intermediate Income |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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