Correlation Between MFS High and Tortoise Capital

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

Diversification Opportunities for MFS High and Tortoise Capital

-0.51

Correlation Coefficient

MFS High  Tortoise Capital

Excellent diversification

The 3 months correlation between MFS and Tortoise is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and Tortoise Capital Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tortoise Capital Series 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 Tortoise Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tortoise Capital Series has no effect on the direction of MFS High i.e., MFS High and Tortoise Capital go up and down completely randomly.

Pair Corralation between MFS High and Tortoise Capital

Considering the 90-day investment horizon MFS High is expected to generate 4.32 times less return on investment than Tortoise Capital. But when comparing it to its historical volatility, MFS High Income is 1.0 times less risky than Tortoise Capital. It trades about 0.03 of its potential returns per unit of risk. Tortoise Capital Series is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,157  in Tortoise Capital Series on October 4, 2024 and sell it today you would earn a total of  883.00  from holding Tortoise Capital Series or generate 76.32% return on investment over 90 days.

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

MFS High Income  vs.  Tortoise Capital Series

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Tortoise Capital Series

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Capital Series are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Tortoise Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MFS High and Tortoise Capital

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

The idea behind MFS High Income and Tortoise Capital Series 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.