Correlation Between MFS High and Aberdeen Australia

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

Diversification Opportunities for MFS High and Aberdeen Australia

0.56

Correlation Coefficient

MFS High  Aberdeen Australia

Very weak diversification

The 3 months correlation between MFS and Aberdeen is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and Aberdeen Australia Ef in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Australia 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 Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Australia has no effect on the direction of MFS High i.e., MFS High and Aberdeen Australia go up and down completely randomly.

Pair Corralation between MFS High and Aberdeen Australia

Considering the 90-day investment horizon MFS High Income is expected to generate 0.75 times more return on investment than Aberdeen Australia. However, MFS High Income is 1.34 times less risky than Aberdeen Australia. It trades about 0.04 of its potential returns per unit of risk. Aberdeen Australia Ef is currently generating about -0.2 per unit of risk. If you would invest  378.00  in MFS High Income on September 17, 2024 and sell it today you would earn a total of  2.00  from holding MFS High Income or generate 0.53% return on investment over 90 days.

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

MFS High Income  vs.  Aberdeen Australia Ef

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 Australia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Australia Ef has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Aberdeen Australia is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MFS High and Aberdeen Australia

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

The idea behind MFS High Income and Aberdeen Australia Ef 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.