Correlation Between MFS Charter and Great Elm

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

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

Diversification Opportunities for MFS Charter and Great Elm

-0.05

Correlation Coefficient

MFS Charter  Great Elm

Good diversification

The 3 months correlation between MFS and Great is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding MFS Charter Income and Great Elm Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Capital and MFS Charter 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 Charter Income are associated (or correlated) with Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Capital has no effect on the direction of MFS Charter i.e., MFS Charter and Great Elm go up and down completely randomly.

Pair Corralation between MFS Charter and Great Elm

Considering the 90-day investment horizon MFS Charter is expected to generate 2.71 times less return on investment than Great Elm. But when comparing it to its historical volatility, MFS Charter Income is 1.65 times less risky than Great Elm. It trades about 0.03 of its potential returns per unit of risk. Great Elm Capital is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  716.00  in Great Elm Capital on September 3, 2024 and sell it today you would earn a total of  312.00  from holding Great Elm Capital or generate 43.58% return on investment over 90 days.

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

MFS Charter Income  vs.  Great Elm Capital

MFS Charter Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Charter Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, MFS Charter is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Great Elm Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great Elm Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Great Elm is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MFS Charter and Great Elm

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

The idea behind MFS Charter Income and Great Elm Capital 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.