Correlation Between MFS Special and Invesco High

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

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

Diversification Opportunities for MFS Special and Invesco High

-0.08

Correlation Coefficient

MFS Special  Invesco High

Good diversification

The 3 months correlation between MFS and Invesco is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding MFS Special Value and Invesco High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High Income and MFS Special 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 Special Value are associated (or correlated) with Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Income has no effect on the direction of MFS Special i.e., MFS Special and Invesco High go up and down completely randomly.

Pair Corralation between MFS Special and Invesco High

If you would invest  728.00  in Invesco High Income on September 3, 2024 and sell it today you would earn a total of  26.00  from holding Invesco High Income or generate 3.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

MFS Special Value  vs.  Invesco High Income

MFS Special Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS Special Value has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, MFS Special is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Invesco High Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Invesco High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MFS Special and Invesco High

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

The idea behind MFS Special Value and Invesco 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.