Correlation Between MFS High and Blackrock Muniholdings

Can any of the company-specific risk be diversified away by investing in both MFS High and Blackrock Muniholdings 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 Blackrock Muniholdings 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 Blackrock Muniholdings Quality, you can compare the effects of market volatilities on MFS High and Blackrock Muniholdings 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 Blackrock Muniholdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and Blackrock Muniholdings.

Diversification Opportunities for MFS High and Blackrock Muniholdings

0.78

Correlation Coefficient

MFS High  Blackrock Muniholdings

Poor diversification

The 3 months correlation between MFS and Blackrock is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Yield and Blackrock Muniholdings Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings 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 Blackrock Muniholdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniholdings has no effect on the direction of MFS High i.e., MFS High and Blackrock Muniholdings go up and down completely randomly.

Pair Corralation between MFS High and Blackrock Muniholdings

Considering the 90-day investment horizon MFS High Yield is expected to under-perform the Blackrock Muniholdings. But the stock apears to be less risky and, when comparing its historical volatility, MFS High Yield is 1.37 times less risky than Blackrock Muniholdings. The stock trades about -0.01 of its potential returns per unit of risk. The Blackrock Muniholdings Quality is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  981.00  in Blackrock Muniholdings Quality on December 28, 2024 and sell it today you would earn a total of  13.00  from holding Blackrock Muniholdings Quality or generate 1.33% return on investment over 90 days.

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

MFS High Yield  vs.  Blackrock Muniholdings Quality

MFS High Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days MFS High Yield has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Blackrock Muniholdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniholdings Quality are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Blackrock Muniholdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MFS High and Blackrock Muniholdings

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

The idea behind MFS High Yield and Blackrock Muniholdings Quality 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.