Correlation Between Virtus AllianzGI and MFS Investment

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

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

Diversification Opportunities for Virtus AllianzGI and MFS Investment

0.33

Correlation Coefficient

Virtus AllianzGI  MFS Investment

Weak diversification

The 3 months correlation between Virtus and MFS is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Virtus AllianzGI Convertible 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 Virtus AllianzGI 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 Virtus AllianzGI Convertible 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 Virtus AllianzGI i.e., Virtus AllianzGI and MFS Investment go up and down completely randomly.

Pair Corralation between Virtus AllianzGI and MFS Investment

Assuming the 90 days trading horizon Virtus AllianzGI is expected to generate 1.64 times less return on investment than MFS Investment. But when comparing it to its historical volatility, Virtus AllianzGI Convertible is 1.18 times less risky than MFS Investment. It trades about 0.03 of its potential returns per unit of risk. MFS Investment Grade is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  688.00  in MFS Investment Grade on October 3, 2024 and sell it today you would earn a total of  111.00  from holding MFS Investment Grade or generate 16.13% return on investment over 90 days.

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

Virtus AllianzGI Convertible  vs.  MFS Investment Grade

Virtus AllianzGI Con

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus AllianzGI Convertible has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MFS Investment Grade

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS Investment Grade has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Virtus AllianzGI and MFS Investment

The main advantage of trading using opposite Virtus AllianzGI and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus AllianzGI 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 Virtus AllianzGI Convertible 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.