Correlation Between MFS Investment and Pimco California
Can any of the company-specific risk be diversified away by investing in both MFS Investment and Pimco California 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 California 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 California Municipal, you can compare the effects of market volatilities on MFS Investment and Pimco California 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 California. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Pimco California.
Diversification Opportunities for MFS Investment and Pimco California
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MFS and Pimco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Pimco California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco California Mun 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 California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco California Mun has no effect on the direction of MFS Investment i.e., MFS Investment and Pimco California go up and down completely randomly.
Pair Corralation between MFS Investment and Pimco California
Considering the 90-day investment horizon MFS Investment is expected to generate 2.16 times less return on investment than Pimco California. But when comparing it to its historical volatility, MFS Investment Grade is 1.22 times less risky than Pimco California. It trades about 0.14 of its potential returns per unit of risk. Pimco California Municipal is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 669.00 in Pimco California Municipal on November 29, 2024 and sell it today you would earn a total of 21.00 from holding Pimco California Municipal or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
MFS Investment Grade vs. Pimco California Municipal
Performance |
| Timeline |
| MFS Investment Grade |
| Pimco California Mun |
MFS Investment and Pimco California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and Pimco California
The main advantage of trading using opposite MFS Investment and Pimco California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, Pimco California 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 California will offset losses from the drop in Pimco California's long position.| MFS Investment vs. Eaton Vance National | MFS Investment vs. Nuveen California Select | MFS Investment vs. Federated Premier Municipal |
| Pimco California vs. Pimco California Municipal | Pimco California vs. BlackRock California Municipal | Pimco California vs. Blackrock Muniholdings Ca | Pimco California vs. Invesco California Value |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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