Correlation Between Logan Ridge and MFS Investment

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

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

Diversification Opportunities for Logan Ridge and MFS Investment

0.06

Correlation Coefficient

Logan Ridge  MFS Investment

Significant diversification

The 3 months correlation between Logan and MFS is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade and Logan Ridge 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 Logan Ridge Finance are associated (or correlated) with MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of Logan Ridge i.e., Logan Ridge and MFS Investment go up and down completely randomly.

Pair Corralation between Logan Ridge and MFS Investment

Given the investment horizon of 90 days Logan Ridge Finance is expected to under-perform the MFS Investment. In addition to that, Logan Ridge is 2.98 times more volatile than MFS Investment Grade. It trades about -0.12 of its total potential returns per unit of risk. MFS Investment Grade is currently generating about 0.04 per unit of volatility. If you would invest  782.00  in MFS Investment Grade on December 26, 2024 and sell it today you would earn a total of  9.00  from holding MFS Investment Grade or generate 1.15% return on investment over 90 days.

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

Logan Ridge Finance  vs.  MFS Investment Grade

Logan Ridge Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Logan Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

MFS Investment Grade

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Investment Grade are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Logan Ridge and MFS Investment

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

The idea behind Logan Ridge Finance and MFS Investment Grade 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.