Correlation Between MFS Intermediate and Invesco High

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

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

Diversification Opportunities for MFS Intermediate and Invesco High

-0.55

Correlation Coefficient

MFS Intermediate  Invesco High

Excellent diversification

The 3 months correlation between MFS and Invesco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding MFS Intermediate Income and Invesco High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High Income and MFS Intermediate 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 Intermediate Income are associated (or correlated) with Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Income has no effect on the direction of MFS Intermediate i.e., MFS Intermediate and Invesco High go up and down completely randomly.

Pair Corralation between MFS Intermediate and Invesco High

Considering the 90-day investment horizon MFS Intermediate Income is expected to generate 6.22 times more return on investment than Invesco High. However, MFS Intermediate is 6.22 times more volatile than Invesco High Income. It trades about 0.06 of its potential returns per unit of risk. Invesco High Income is currently generating about 0.32 per unit of risk. If you would invest  270.00  in MFS Intermediate Income on September 4, 2024 and sell it today you would earn a total of  2.00  from holding MFS Intermediate Income or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

MFS Intermediate Income  vs.  Invesco High Income

MFS Intermediate Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS Intermediate Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, MFS Intermediate is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Invesco High Income

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Invesco High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MFS Intermediate and Invesco High

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

The idea behind MFS Intermediate Income and Invesco High Income 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.