Correlation Between Eaton Vance and MFS High

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

By analyzing existing cross correlation between Eaton Vance Risk and MFS High Income, you can compare the effects of market volatilities on Eaton Vance and MFS High 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 Eaton Vance with a short position of MFS High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and MFS High.

Diversification Opportunities for Eaton Vance and MFS High

-0.27

Correlation Coefficient

Eaton Vance  MFS High

Very good diversification

The 3 months correlation between Eaton and MFS is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Risk and MFS High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Income and Eaton Vance 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 Eaton Vance Risk are associated (or correlated) with MFS High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS High Income has no effect on the direction of Eaton Vance i.e., Eaton Vance and MFS High go up and down completely randomly.

Pair Corralation between Eaton Vance and MFS High

Considering the 90-day investment horizon Eaton Vance Risk is expected to under-perform the MFS High. In addition to that, Eaton Vance is 1.06 times more volatile than MFS High Income. It trades about -0.12 of its total potential returns per unit of risk. MFS High Income is currently generating about 0.03 per unit of volatility. If you would invest  364.00  in MFS High Income on December 26, 2024 and sell it today you would earn a total of  5.00  from holding MFS High Income or generate 1.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Eaton Vance Risk  vs.  MFS High Income

Eaton Vance Risk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Risk has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

MFS High Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MFS High Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Eaton Vance and MFS High

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

The idea behind Eaton Vance Risk and MFS High 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.