Correlation Between Bny Mellon and Mfs Municipal

Can any of the company-specific risk be diversified away by investing in both Bny Mellon and Mfs Municipal 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 Bny Mellon and Mfs Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bny Mellon Strategic and Mfs Municipal Income, you can compare the effects of market volatilities on Bny Mellon and Mfs Municipal 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 Bny Mellon with a short position of Mfs Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bny Mellon and Mfs Municipal.

Diversification Opportunities for Bny Mellon and Mfs Municipal

0.5

Correlation Coefficient

Bny Mellon  Mfs Municipal

Very weak diversification

The 3 months correlation between Bny and Mfs is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Strategic and Mfs Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Municipal Income and Bny Mellon 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 Bny Mellon Strategic are associated (or correlated) with Mfs Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Municipal Income has no effect on the direction of Bny Mellon i.e., Bny Mellon and Mfs Municipal go up and down completely randomly.

Pair Corralation between Bny Mellon and Mfs Municipal

Considering the 90-day investment horizon Bny Mellon Strategic is expected to generate 1.67 times more return on investment than Mfs Municipal. However, Bny Mellon is 1.67 times more volatile than Mfs Municipal Income. It trades about 0.09 of its potential returns per unit of risk. Mfs Municipal Income is currently generating about -0.02 per unit of risk. If you would invest  569.00  in Bny Mellon Strategic on December 23, 2024 and sell it today you would earn a total of  20.00  from holding Bny Mellon Strategic or generate 3.51% return on investment over 90 days.

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

Bny Mellon Strategic  vs.  Mfs Municipal Income

Bny Mellon Strategic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Strategic are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Bny Mellon is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Mfs Municipal Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Municipal Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Mfs Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bny Mellon and Mfs Municipal

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

The idea behind Bny Mellon Strategic and Mfs Municipal Income 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.