Correlation Between MFS Charter and Blackrock Muniholdings

Can any of the company-specific risk be diversified away by investing in both MFS Charter and Blackrock Muniholdings 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 Blackrock Muniholdings 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 Blackrock Muniholdings Quality, you can compare the effects of market volatilities on MFS Charter and Blackrock Muniholdings 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 Blackrock Muniholdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Charter and Blackrock Muniholdings.

Diversification Opportunities for MFS Charter and Blackrock Muniholdings

0.84

Correlation Coefficient

MFS Charter  Blackrock Muniholdings

Very poor diversification

The 3 months correlation between MFS and Blackrock is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MFS Charter Income and Blackrock Muniholdings Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings 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 Blackrock Muniholdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniholdings has no effect on the direction of MFS Charter i.e., MFS Charter and Blackrock Muniholdings go up and down completely randomly.

Pair Corralation between MFS Charter and Blackrock Muniholdings

Considering the 90-day investment horizon MFS Charter Income is expected to generate 0.78 times more return on investment than Blackrock Muniholdings. However, MFS Charter Income is 1.27 times less risky than Blackrock Muniholdings. It trades about 0.09 of its potential returns per unit of risk. Blackrock Muniholdings Quality is currently generating about 0.02 per unit of risk. If you would invest  608.00  in MFS Charter Income on December 27, 2024 and sell it today you would earn a total of  18.00  from holding MFS Charter Income or generate 2.96% return on investment over 90 days.

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

MFS Charter Income  vs.  Blackrock Muniholdings Quality

MFS Charter Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Charter Income are ranked lower than 7 (%) 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.

Blackrock Muniholdings

Risk-Adjusted Performance

Weak

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

Pair Trading with MFS Charter and Blackrock Muniholdings

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

The idea behind MFS Charter Income and Blackrock Muniholdings Quality 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.