Correlation Between Ecofin Sustainable and MFS High

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

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

Diversification Opportunities for Ecofin Sustainable and MFS High

0.25

Correlation Coefficient

Ecofin Sustainable  MFS High

Modest diversification

The 3 months correlation between Ecofin and MFS is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ecofin Sustainable And and MFS High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Income and Ecofin Sustainable 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 Ecofin Sustainable And are associated (or correlated) with MFS High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS High Income has no effect on the direction of Ecofin Sustainable i.e., Ecofin Sustainable and MFS High go up and down completely randomly.

Pair Corralation between Ecofin Sustainable and MFS High

Given the investment horizon of 90 days Ecofin Sustainable And is expected to under-perform the MFS High. But the fund apears to be less risky and, when comparing its historical volatility, Ecofin Sustainable And is 1.13 times less risky than MFS High. The fund trades about -0.06 of its potential returns per unit of risk. The MFS High Income is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  364.00  in MFS High Income on December 26, 2024 and sell it today you would earn a total of  5.00  from holding MFS High Income or generate 1.37% return on investment over 90 days.

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

Ecofin Sustainable And  vs.  MFS High Income

Ecofin Sustainable And

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecofin Sustainable And has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Ecofin Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MFS High Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MFS High Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, MFS High is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ecofin Sustainable and MFS High

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

The idea behind Ecofin Sustainable And and MFS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.