Correlation Between Tradeweb Markets and MFS Intermediate

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

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

Diversification Opportunities for Tradeweb Markets and MFS Intermediate

-0.2

Correlation Coefficient

Tradeweb Markets  MFS Intermediate

Good diversification

The 3 months correlation between Tradeweb and MFS is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and MFS Intermediate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Intermediate Income and Tradeweb Markets 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 Tradeweb Markets are associated (or correlated) with MFS Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Intermediate Income has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and MFS Intermediate go up and down completely randomly.

Pair Corralation between Tradeweb Markets and MFS Intermediate

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 1.53 times less return on investment than MFS Intermediate. In addition to that, Tradeweb Markets is 2.36 times more volatile than MFS Intermediate Income. It trades about 0.01 of its total potential returns per unit of risk. MFS Intermediate Income is currently generating about 0.05 per unit of volatility. If you would invest  265.00  in MFS Intermediate Income on December 2, 2024 and sell it today you would earn a total of  5.00  from holding MFS Intermediate Income or generate 1.89% return on investment over 90 days.

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

Tradeweb Markets  vs.  MFS Intermediate Income

Tradeweb Markets

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tradeweb Markets is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

MFS Intermediate Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Intermediate Income are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Tradeweb Markets and MFS Intermediate

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

The idea behind Tradeweb Markets and MFS Intermediate 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.