Correlation Between MFS High and Guardian Capital

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

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

Diversification Opportunities for MFS High and Guardian Capital

0.58

Correlation Coefficient

MFS High  Guardian Capital

Very weak diversification

The 3 months correlation between MFS and Guardian is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Yield and Guardian Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Capital and MFS High 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 High Yield are associated (or correlated) with Guardian Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Capital has no effect on the direction of MFS High i.e., MFS High and Guardian Capital go up and down completely randomly.

Pair Corralation between MFS High and Guardian Capital

Considering the 90-day investment horizon MFS High Yield is expected to generate 0.45 times more return on investment than Guardian Capital. However, MFS High Yield is 2.21 times less risky than Guardian Capital. It trades about -0.1 of its potential returns per unit of risk. Guardian Capital Group is currently generating about -0.08 per unit of risk. If you would invest  360.00  in MFS High Yield on September 27, 2024 and sell it today you would lose (13.00) from holding MFS High Yield or give up 3.61% of portfolio value over 90 days.

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

MFS High Yield  vs.  Guardian Capital Group

MFS High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS High Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, MFS High is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Guardian Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardian Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with MFS High and Guardian Capital

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

The idea behind MFS High Yield and Guardian Capital Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.