Correlation Between BlackRock ESG and MFS High

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

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

Diversification Opportunities for BlackRock ESG and MFS High

0.01

Correlation Coefficient

BlackRock ESG  MFS High

Significant diversification

The 3 months correlation between BlackRock and MFS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ESG Capital 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 BlackRock ESG 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 BlackRock ESG Capital 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 BlackRock ESG i.e., BlackRock ESG and MFS High go up and down completely randomly.

Pair Corralation between BlackRock ESG and MFS High

Given the investment horizon of 90 days BlackRock ESG Capital is expected to generate 1.07 times more return on investment than MFS High. However, BlackRock ESG is 1.07 times more volatile than MFS High Income. It trades about 0.08 of its potential returns per unit of risk. MFS High Income is currently generating about -0.07 per unit of risk. If you would invest  1,697  in BlackRock ESG Capital on September 15, 2024 and sell it today you would earn a total of  60.00  from holding BlackRock ESG Capital or generate 3.54% return on investment over 90 days.

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

BlackRock ESG Capital  vs.  MFS High Income

BlackRock ESG Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock ESG is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with BlackRock ESG and MFS High

The main advantage of trading using opposite BlackRock ESG and MFS High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock ESG 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 BlackRock ESG Capital 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.