Correlation Between MFS Investment and Pimco Municipal
Can any of the company-specific risk be diversified away by investing in both MFS Investment and Pimco 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 Investment and Pimco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFS Investment Grade and Pimco Municipal Income, you can compare the effects of market volatilities on MFS Investment and Pimco 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 Investment with a short position of Pimco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Pimco Municipal.
Diversification Opportunities for MFS Investment and Pimco Municipal
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MFS and Pimco is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Pimco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Municipal Income and MFS Investment 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 Investment Grade are associated (or correlated) with Pimco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Municipal Income has no effect on the direction of MFS Investment i.e., MFS Investment and Pimco Municipal go up and down completely randomly.
Pair Corralation between MFS Investment and Pimco Municipal
Considering the 90-day investment horizon MFS Investment Grade is expected to generate 0.56 times more return on investment than Pimco Municipal. However, MFS Investment Grade is 1.77 times less risky than Pimco Municipal. It trades about 0.13 of its potential returns per unit of risk. Pimco Municipal Income is currently generating about 0.05 per unit of risk. If you would invest 710.00 in MFS Investment Grade on September 3, 2024 and sell it today you would earn a total of 112.00 from holding MFS Investment Grade or generate 15.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Investment Grade vs. Pimco Municipal Income
Performance |
| Timeline |
| MFS Investment Grade |
| Pimco Municipal Income |
MFS Investment and Pimco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and Pimco Municipal
The main advantage of trading using opposite MFS Investment and Pimco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, Pimco 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 Pimco Municipal will offset losses from the drop in Pimco Municipal's long position.| MFS Investment vs. Invesco High Income | MFS Investment vs. Eaton Vance National | MFS Investment vs. Nuveen California Select | MFS Investment vs. Federated Premier Municipal |
| Pimco Municipal vs. Pimco Municipal Income | Pimco Municipal vs. Pimco Municipal Income | Pimco Municipal vs. Pimco California Municipal | Pimco Municipal vs. Pimco New York |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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