Correlation Between MFS High and Aberdeen Total

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

By analyzing existing cross correlation between MFS High Income and Aberdeen Total Dynamic, you can compare the effects of market volatilities on MFS High and Aberdeen Total 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 Aberdeen Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and Aberdeen Total.

Diversification Opportunities for MFS High and Aberdeen Total

0.77

Correlation Coefficient

MFS High  Aberdeen Total

Poor diversification

The 3 months correlation between MFS and Aberdeen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and Aberdeen Total Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Total Dynamic 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 Income are associated (or correlated) with Aberdeen Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Total Dynamic has no effect on the direction of MFS High i.e., MFS High and Aberdeen Total go up and down completely randomly.

Pair Corralation between MFS High and Aberdeen Total

Considering the 90-day investment horizon MFS High Income is expected to under-perform the Aberdeen Total. In addition to that, MFS High is 1.01 times more volatile than Aberdeen Total Dynamic. It trades about -0.17 of its total potential returns per unit of risk. Aberdeen Total Dynamic is currently generating about -0.17 per unit of volatility. If you would invest  871.00  in Aberdeen Total Dynamic on September 23, 2024 and sell it today you would lose (23.00) from holding Aberdeen Total Dynamic or give up 2.64% of portfolio value over 90 days.

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

MFS High Income  vs.  Aberdeen Total Dynamic

MFS High Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS High Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MFS High is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Aberdeen Total Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Total Dynamic has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Aberdeen Total is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MFS High and Aberdeen Total

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

The idea behind MFS High Income and Aberdeen Total Dynamic 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.