Correlation Between MFS High and Mount Logan

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

By analyzing existing cross correlation between MFS High Income and Mount Logan Capital, you can compare the effects of market volatilities on MFS High and Mount Logan 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 Mount Logan. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and Mount Logan.

Diversification Opportunities for MFS High and Mount Logan

0.78

Correlation Coefficient

MFS High  Mount Logan

Poor diversification

The 3 months correlation between MFS and Mount is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and Mount Logan Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Logan 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 Income are associated (or correlated) with Mount Logan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Logan Capital has no effect on the direction of MFS High i.e., MFS High and Mount Logan go up and down completely randomly.

Pair Corralation between MFS High and Mount Logan

Considering the 90-day investment horizon MFS High is expected to generate 3.75 times less return on investment than Mount Logan. But when comparing it to its historical volatility, MFS High Income is 4.47 times less risky than Mount Logan. It trades about 0.1 of its potential returns per unit of risk. Mount Logan Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  111.00  in Mount Logan Capital on September 15, 2024 and sell it today you would earn a total of  38.00  from holding Mount Logan Capital or generate 34.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	50.93%
Values	Daily Returns

MFS High Income  vs.  Mount Logan Capital

MFS High Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS High Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MFS High is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Mount Logan Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mount Logan Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental 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 Mount Logan

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

The idea behind MFS High Income and Mount Logan Capital 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.