Correlation Between Clearbridge Energy and MFS High

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

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

Diversification Opportunities for Clearbridge Energy and MFS High

-0.24

Correlation Coefficient

Clearbridge Energy  MFS High

Very good diversification

The 3 months correlation between Clearbridge and MFS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and MFS High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Yield and Clearbridge Energy 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 Clearbridge Energy Mlp are associated (or correlated) with MFS High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS High Yield has no effect on the direction of Clearbridge Energy i.e., Clearbridge Energy and MFS High go up and down completely randomly.

Pair Corralation between Clearbridge Energy and MFS High

Considering the 90-day investment horizon Clearbridge Energy Mlp is expected to generate 709.31 times more return on investment than MFS High. However, Clearbridge Energy is 709.31 times more volatile than MFS High Yield. It trades about 0.33 of its potential returns per unit of risk. MFS High Yield is currently generating about 0.06 per unit of risk. If you would invest  17.00  in Clearbridge Energy Mlp on August 31, 2024 and sell it today you would earn a total of  3.00  from holding Clearbridge Energy Mlp or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	11.11%
Values	Daily Returns

Clearbridge Energy Mlp  vs.  MFS High Yield

Clearbridge Energy Mlp

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Clearbridge Energy Mlp has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively weak basic indicators, Clearbridge Energy reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Clearbridge Energy and MFS High

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

The idea behind Clearbridge Energy Mlp and MFS High Yield 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.