Correlation Between MFS High and MFS Municipal
Can any of the company-specific risk be diversified away by investing in both MFS High and MFS Municipal 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 MFS Municipal 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 MFS Municipal Income, you can compare the effects of market volatilities on MFS High and MFS Municipal 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 MFS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and MFS Municipal.
Diversification Opportunities for MFS High and MFS Municipal
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MFS and MFS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and MFS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Municipal Income 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 MFS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Municipal Income has no effect on the direction of MFS High i.e., MFS High and MFS Municipal go up and down completely randomly.
Pair Corralation between MFS High and MFS Municipal
Considering the 90-day investment horizon MFS High is expected to generate 1.2 times less return on investment than MFS Municipal. But when comparing it to its historical volatility, MFS High Income is 1.02 times less risky than MFS Municipal. It trades about 0.07 of its potential returns per unit of risk. MFS Municipal Income is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 501.00 in MFS Municipal Income on June 7, 2025 and sell it today you would earn a total of 14.00 from holding MFS Municipal Income or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS High Income vs. MFS Municipal Income
Performance |
| Timeline |
| MFS High Income |
| MFS Municipal Income |
MFS High and MFS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS High and MFS Municipal
The main advantage of trading using opposite MFS High and MFS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS High position performs unexpectedly, MFS Municipal 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 Municipal will offset losses from the drop in MFS Municipal's long position.| MFS High vs. MFS High Yield | MFS High vs. MFS Investment Grade | MFS High vs. MFS Municipal Income | MFS High vs. DTF Tax Free |
| MFS Municipal vs. MFS Investment Grade | MFS Municipal vs. Eaton Vance National | MFS Municipal vs. Blackrock Munivest | MFS Municipal vs. DTF Tax Free |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| AI Portfolio Prophet Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |