Correlation Between Mfs Intermediate and Icon Equity

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

By analyzing existing cross correlation between Mfs Intermediate High and Icon Equity Income, you can compare the effects of market volatilities on Mfs Intermediate and Icon Equity 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 Icon Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Intermediate and Icon Equity.

Diversification Opportunities for Mfs Intermediate and Icon Equity

0.94

Correlation Coefficient

Mfs Intermediate  Icon Equity

Almost no diversification

The 3 months correlation between Mfs and Icon is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Intermediate High and Icon Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Equity Income 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 High are associated (or correlated) with Icon Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Equity Income has no effect on the direction of Mfs Intermediate i.e., Mfs Intermediate and Icon Equity go up and down completely randomly.

Pair Corralation between Mfs Intermediate and Icon Equity

Considering the 90-day investment horizon Mfs Intermediate is expected to generate 28.93 times less return on investment than Icon Equity. But when comparing it to its historical volatility, Mfs Intermediate High is 1.07 times less risky than Icon Equity. It trades about 0.0 of its potential returns per unit of risk. Icon Equity Income is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,707  in Icon Equity Income on July 1, 2024 and sell it today you would earn a total of  15.00  from holding Icon Equity Income or generate 0.88% return on investment over 90 days.

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

Mfs Intermediate High  vs.  Icon Equity Income

Mfs Intermediate High

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Intermediate High are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly fragile forward indicators, Mfs Intermediate may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Icon Equity Income

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Equity Income are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Icon Equity may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with Mfs Intermediate and Icon Equity

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

The idea behind Mfs Intermediate High and Icon Equity Income 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.