Correlation Between Blackrock Muniholdings and MFS Government

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

By analyzing existing cross correlation between Blackrock Muniholdings Ny and MFS Government Markets, you can compare the effects of market volatilities on Blackrock Muniholdings and MFS Government 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 Blackrock Muniholdings with a short position of MFS Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniholdings and MFS Government.

Diversification Opportunities for Blackrock Muniholdings and MFS Government

0.69

Correlation Coefficient

Blackrock Muniholdings  MFS Government

Poor diversification

The 3 months correlation between Blackrock and MFS is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Ny and MFS Government Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Government Markets and Blackrock Muniholdings 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 Blackrock Muniholdings Ny are associated (or correlated) with MFS Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Government Markets has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and MFS Government go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and MFS Government

Considering the 90-day investment horizon Blackrock Muniholdings Ny is expected to generate 0.95 times more return on investment than MFS Government. However, Blackrock Muniholdings Ny is 1.05 times less risky than MFS Government. It trades about 0.02 of its potential returns per unit of risk. MFS Government Markets is currently generating about 0.02 per unit of risk. If you would invest  981.00  in Blackrock Muniholdings Ny on October 5, 2024 and sell it today you would earn a total of  66.00  from holding Blackrock Muniholdings Ny or generate 6.73% return on investment over 90 days.

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

Blackrock Muniholdings Ny  vs.  MFS Government Markets

Blackrock Muniholdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniholdings Ny has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical indicators, Blackrock Muniholdings is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

MFS Government Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS Government Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, MFS Government is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Blackrock Muniholdings and MFS Government

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

The idea behind Blackrock Muniholdings Ny and MFS Government Markets 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.