Correlation Between MFS High and Portman Ridge

Can any of the company-specific risk be diversified away by investing in both MFS High and Portman Ridge 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 Portman Ridge 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 Portman Ridge Finance, you can compare the effects of market volatilities on MFS High and Portman Ridge 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 Portman Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS High and Portman Ridge.

Diversification Opportunities for MFS High and Portman Ridge

0.9

Correlation Coefficient

MFS High  Portman Ridge

Almost no diversification

The 3 months correlation between MFS and Portman is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding MFS High Income and Portman Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portman Ridge Finance 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 Portman Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portman Ridge Finance has no effect on the direction of MFS High i.e., MFS High and Portman Ridge go up and down completely randomly.

Pair Corralation between MFS High and Portman Ridge

Considering the 90-day investment horizon MFS High Income is expected to generate 0.69 times more return on investment than Portman Ridge. However, MFS High Income is 1.44 times less risky than Portman Ridge. It trades about 0.03 of its potential returns per unit of risk. Portman Ridge Finance is currently generating about -0.03 per unit of risk. If you would invest  318.00  in MFS High Income on March 6, 2025 and sell it today you would earn a total of  33.00  from holding MFS High Income or generate 10.38% return on investment over 90 days.

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

MFS High Income  vs.  Portman Ridge Finance

MFS High Income

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Portman Ridge Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Portman Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in July 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MFS High and Portman Ridge

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

The idea behind MFS High Income and Portman Ridge Finance 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.