Correlation Between MFS Multimarket and MFS Investment

Can any of the company-specific risk be diversified away by investing in both MFS Multimarket 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 Multimarket 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 Multimarket Income and MFS Investment Grade, you can compare the effects of market volatilities on MFS Multimarket 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 Multimarket with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Multimarket and MFS Investment.

Diversification Opportunities for MFS Multimarket and MFS Investment

0.91

Correlation Coefficient

MFS Multimarket  MFS Investment

Almost no diversification

The 3 months correlation between MFS and MFS is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding MFS Multimarket 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 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 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 Multimarket i.e., MFS Multimarket and MFS Investment go up and down completely randomly.

Pair Corralation between MFS Multimarket and MFS Investment

Considering the 90-day investment horizon MFS Multimarket Income is expected to generate 1.28 times more return on investment than MFS Investment. However, MFS Multimarket is 1.28 times more volatile than MFS Investment Grade. It trades about 0.21 of its potential returns per unit of risk. MFS Investment Grade is currently generating about 0.22 per unit of risk. If you would invest  475.00  in MFS Multimarket Income on June 29, 2024 and sell it today you would earn a total of  9.00  from holding MFS Multimarket Income or generate 1.89% return on investment over 90 days.

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

MFS Multimarket Income  vs.  MFS Investment Grade

MFS Multimarket Income

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Multimarket Income are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, MFS Multimarket is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

MFS Investment Grade

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Investment Grade are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, MFS Investment is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with MFS Multimarket and MFS Investment

The main advantage of trading using opposite MFS Multimarket and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Multimarket 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 Multimarket 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.