Correlation Between Bbh Intermediate and Mfs Mid

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

By analyzing existing cross correlation between Bbh Intermediate Municipal and Mfs Mid Cap, you can compare the effects of market volatilities on Bbh Intermediate and Mfs Mid 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 Bbh Intermediate with a short position of Mfs Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bbh Intermediate and Mfs Mid.

Diversification Opportunities for Bbh Intermediate and Mfs Mid

0.2

Correlation Coefficient

Bbh Intermediate  Mfs Mid

Modest diversification

The 3 months correlation between Bbh and Mfs is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bbh Intermediate Municipal and Mfs Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Mid Cap and Bbh 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 Bbh Intermediate Municipal are associated (or correlated) with Mfs Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Mid Cap has no effect on the direction of Bbh Intermediate i.e., Bbh Intermediate and Mfs Mid go up and down completely randomly.

Pair Corralation between Bbh Intermediate and Mfs Mid

Assuming the 90 days horizon Bbh Intermediate is expected to generate 2.68 times less return on investment than Mfs Mid. But when comparing it to its historical volatility, Bbh Intermediate Municipal is 5.38 times less risky than Mfs Mid. It trades about 0.1 of its potential returns per unit of risk. Mfs Mid Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,520  in Mfs Mid Cap on September 12, 2024 and sell it today you would earn a total of  435.00  from holding Mfs Mid Cap or generate 17.26% return on investment over 90 days.

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

Bbh Intermediate Municipal  vs.  Mfs Mid Cap

Bbh Intermediate Mun

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bbh Intermediate Municipal are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Bbh Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Mid Cap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Mid Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Mfs Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bbh Intermediate and Mfs Mid

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

The idea behind Bbh Intermediate Municipal and Mfs Mid Cap 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.