Correlation Between Highland Funds and MFS Special

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

By analyzing existing cross correlation between Highland Funds I and MFS Special Value, you can compare the effects of market volatilities on Highland Funds and MFS Special 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 Highland Funds with a short position of MFS Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Funds and MFS Special.

Diversification Opportunities for Highland Funds and MFS Special

0.0

Correlation Coefficient

Highland Funds  MFS Special

Pay attention - limited upside

The 3 months correlation between Highland and MFS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Highland Funds I and MFS Special Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Special Value and Highland Funds 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 Highland Funds I are associated (or correlated) with MFS Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Special Value has no effect on the direction of Highland Funds i.e., Highland Funds and MFS Special go up and down completely randomly.

Pair Corralation between Highland Funds and MFS Special

Assuming the 90 days trading horizon Highland Funds I is expected to generate 0.84 times more return on investment than MFS Special. However, Highland Funds I is 1.19 times less risky than MFS Special. It trades about -0.01 of its potential returns per unit of risk. MFS Special Value is currently generating about -0.04 per unit of risk. If you would invest  1,830  in Highland Funds I on October 26, 2024 and sell it today you would lose (96.00) from holding Highland Funds I or give up 5.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	23.68%
Values	Daily Returns

Highland Funds I  vs.  MFS Special Value

Highland Funds I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highland Funds I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MFS Special Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS Special Value has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, MFS Special is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Highland Funds and MFS Special

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

The idea behind Highland Funds I and MFS Special Value 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 Managers module to screen money managers from public funds and ETFs managed around the world.