Correlation Between MFS High and MainStay CBRE

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

Diversification Opportunities for MFS High and MainStay CBRE

0.82

Correlation Coefficient

MFS High  MainStay CBRE

Very poor diversification

The 3 months correlation between MFS and MainStay is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and MainStay CBRE Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MainStay CBRE Global 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 MainStay CBRE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MainStay CBRE Global has no effect on the direction of MFS High i.e., MFS High and MainStay CBRE go up and down completely randomly.

Pair Corralation between MFS High and MainStay CBRE

Considering the 90-day investment horizon MFS High Income is expected to generate 0.65 times more return on investment than MainStay CBRE. However, MFS High Income is 1.54 times less risky than MainStay CBRE. It trades about -0.17 of its potential returns per unit of risk. MainStay CBRE Global is currently generating about -0.39 per unit of risk. If you would invest  376.00  in MFS High Income on September 23, 2024 and sell it today you would lose (10.00) from holding MFS High Income or give up 2.66% of portfolio value over 90 days.

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

MFS High Income  vs.  MainStay CBRE Global

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.

MainStay CBRE Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MainStay CBRE Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with MFS High and MainStay CBRE

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

The idea behind MFS High Income and MainStay CBRE Global 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.