Correlation Between MFS Investment and Virtus Dividend

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

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

Diversification Opportunities for MFS Investment and Virtus Dividend

0.48

Correlation Coefficient

MFS Investment  Virtus Dividend

Very weak diversification

The 3 months correlation between MFS and Virtus is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Virtus Dividend Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Dividend Interest and MFS Investment 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 Investment Grade are associated (or correlated) with Virtus Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Dividend Interest has no effect on the direction of MFS Investment i.e., MFS Investment and Virtus Dividend go up and down completely randomly.

Pair Corralation between MFS Investment and Virtus Dividend

Considering the 90-day investment horizon MFS Investment is expected to generate 2.0 times less return on investment than Virtus Dividend. In addition to that, MFS Investment is 1.04 times more volatile than Virtus Dividend Interest. It trades about 0.2 of its total potential returns per unit of risk. Virtus Dividend Interest is currently generating about 0.41 per unit of volatility. If you would invest  1,259  in Virtus Dividend Interest on September 1, 2024 and sell it today you would earn a total of  64.00  from holding Virtus Dividend Interest or generate 5.08% return on investment over 90 days.

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

MFS Investment Grade  vs.  Virtus Dividend Interest

MFS Investment Grade

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Investment Grade are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, MFS Investment is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Virtus Dividend Interest

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Dividend Interest are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady technical and fundamental indicators, Virtus Dividend is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with MFS Investment and Virtus Dividend

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

The idea behind MFS Investment Grade and Virtus Dividend Interest 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.