Correlation Between MFS High and Clearbridge Energy

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

By analyzing existing cross correlation between MFS High Yield and Clearbridge Energy Mlp, you can compare the effects of market volatilities on MFS High and Clearbridge Energy 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 High with a short position of Clearbridge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and Clearbridge Energy.

Diversification Opportunities for MFS High and Clearbridge Energy

-0.11

Correlation Coefficient

MFS High  Clearbridge Energy

Good diversification

The 3 months correlation between MFS and Clearbridge is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Yield and Clearbridge Energy Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Energy Mlp and MFS High 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 High Yield are associated (or correlated) with Clearbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Energy Mlp has no effect on the direction of MFS High i.e., MFS High and Clearbridge Energy go up and down completely randomly.

Pair Corralation between MFS High and Clearbridge Energy

Considering the 90-day investment horizon MFS High is expected to generate 11.32 times less return on investment than Clearbridge Energy. But when comparing it to its historical volatility, MFS High Yield is 2.01 times less risky than Clearbridge Energy. It trades about 0.06 of its potential returns per unit of risk. Clearbridge Energy Mlp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  3,969  in Clearbridge Energy Mlp on August 31, 2024 and sell it today you would earn a total of  1,011  from holding Clearbridge Energy Mlp or generate 25.47% return on investment over 90 days.

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

MFS High Yield  vs.  Clearbridge Energy Mlp

MFS High Yield

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MFS High Yield are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, MFS High is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Clearbridge Energy Mlp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of very uncertain primary indicators, Clearbridge Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MFS High and Clearbridge Energy

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

The idea behind MFS High Yield and Clearbridge Energy Mlp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.