Correlation Between MFS Investment and Calamos Convertible

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

By analyzing existing cross correlation between MFS Investment Grade and Calamos Convertible Opportunities, you can compare the effects of market volatilities on MFS Investment and Calamos Convertible 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 Investment with a short position of Calamos Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Calamos Convertible.

Diversification Opportunities for MFS Investment and Calamos Convertible

0.16

Correlation Coefficient

MFS Investment  Calamos Convertible

Average diversification

The 3 months correlation between MFS and Calamos is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Calamos Convertible Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos Convertible and MFS Investment 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 Investment Grade are associated (or correlated) with Calamos Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos Convertible has no effect on the direction of MFS Investment i.e., MFS Investment and Calamos Convertible go up and down completely randomly.

Pair Corralation between MFS Investment and Calamos Convertible

Considering the 90-day investment horizon MFS Investment Grade is expected to generate 0.61 times more return on investment than Calamos Convertible. However, MFS Investment Grade is 1.64 times less risky than Calamos Convertible. It trades about 0.07 of its potential returns per unit of risk. Calamos Convertible Opportunities is currently generating about 0.03 per unit of risk. If you would invest  665.00  in MFS Investment Grade on November 20, 2024 and sell it today you would earn a total of  142.00  from holding MFS Investment Grade or generate 21.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

MFS Investment Grade  vs.  Calamos Convertible Opportunit

MFS Investment Grade

Risk-Adjusted Performance

Very Weak

Over the last 90 days MFS Investment Grade has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, MFS Investment is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Calamos Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calamos Convertible Opportunities has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong technical indicators, Calamos Convertible is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with MFS Investment and Calamos Convertible

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

The idea behind MFS Investment Grade and Calamos Convertible Opportunities 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.