Correlation Between Pioneer Municipal and MFS Government
Can any of the company-specific risk be diversified away by investing in both Pioneer Municipal and MFS Government 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 Pioneer Municipal and MFS Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pioneer Municipal High and MFS Government Markets, you can compare the effects of market volatilities on Pioneer Municipal and MFS Government 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 Pioneer Municipal with a short position of MFS Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer Municipal and MFS Government.
Diversification Opportunities for Pioneer Municipal and MFS Government
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pioneer and MFS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Municipal High and MFS Government Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Government Markets and Pioneer Municipal 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 Pioneer Municipal High are associated (or correlated) with MFS Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Government Markets has no effect on the direction of Pioneer Municipal i.e., Pioneer Municipal and MFS Government go up and down completely randomly.
Pair Corralation between Pioneer Municipal and MFS Government
Considering the 90-day investment horizon Pioneer Municipal High is expected to generate 0.97 times more return on investment than MFS Government. However, Pioneer Municipal High is 1.03 times less risky than MFS Government. It trades about 0.08 of its potential returns per unit of risk. MFS Government Markets is currently generating about 0.03 per unit of risk. If you would invest 798.00 in Pioneer Municipal High on August 31, 2024 and sell it today you would earn a total of 164.00 from holding Pioneer Municipal High or generate 20.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pioneer Municipal High vs. MFS Government Markets
Performance |
| Timeline |
| Pioneer Municipal High |
| MFS Government Markets |
Pioneer Municipal and MFS Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pioneer Municipal and MFS Government
The main advantage of trading using opposite Pioneer Municipal and MFS Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer Municipal position performs unexpectedly, MFS Government 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 Government will offset losses from the drop in MFS Government's long position.| Pioneer Municipal vs. Nuveen Mortgage Opportunity | Pioneer Municipal vs. Western Asset Investment | Pioneer Municipal vs. Western Asset Global | Pioneer Municipal vs. MFS Municipal Income |
| MFS Government vs. MFS Investment Grade | MFS Government vs. Invesco High Income | MFS Government vs. Eaton Vance National | MFS Government vs. Nuveen California Select |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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