Correlation Between Guardian Capital and MFS High

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

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

Diversification Opportunities for Guardian Capital and MFS High

0.58

Correlation Coefficient

Guardian Capital  MFS High

Very weak diversification

The 3 months correlation between Guardian and MFS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Capital Group and MFS High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Yield and Guardian Capital 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 Guardian Capital Group 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 Yield has no effect on the direction of Guardian Capital i.e., Guardian Capital and MFS High go up and down completely randomly.

Pair Corralation between Guardian Capital and MFS High

Assuming the 90 days horizon Guardian Capital Group is expected to under-perform the MFS High. In addition to that, Guardian Capital is 2.21 times more volatile than MFS High Yield. It trades about -0.08 of its total potential returns per unit of risk. MFS High Yield is currently generating about -0.1 per unit of volatility. 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

Guardian Capital Group  vs.  MFS High Yield

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.

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.

Pair Trading with Guardian Capital and MFS High

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