Correlation Between Pimco High and Mfs Utilities
Can any of the company-specific risk be diversified away by investing in both Pimco High and Mfs Utilities 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 Pimco High and Mfs Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco High Yield and Mfs Utilities Fund, you can compare the effects of market volatilities on Pimco High and Mfs Utilities 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 Pimco High with a short position of Mfs Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco High and Mfs Utilities.
Diversification Opportunities for Pimco High and Mfs Utilities
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Mfs is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pimco High Yield and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities and Pimco 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 Pimco High Yield are associated (or correlated) with Mfs Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Pimco High i.e., Pimco High and Mfs Utilities go up and down completely randomly.
Pair Corralation between Pimco High and Mfs Utilities
Assuming the 90 days horizon Pimco High is expected to generate 2.13 times less return on investment than Mfs Utilities. But when comparing it to its historical volatility, Pimco High Yield is 4.2 times less risky than Mfs Utilities. It trades about 0.22 of its potential returns per unit of risk. Mfs Utilities Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,842 in Mfs Utilities Fund on August 29, 2024 and sell it today you would earn a total of 657.00 from holding Mfs Utilities Fund or generate 35.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco High Yield vs. Mfs Utilities Fund
Performance |
| Timeline |
| Pimco High Yield |
| Mfs Utilities |
Pimco High and Mfs Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco High and Mfs Utilities
The main advantage of trading using opposite Pimco High and Mfs Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco High position performs unexpectedly, Mfs Utilities 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 Utilities will offset losses from the drop in Mfs Utilities' long position.| Pimco High vs. Western Asset High | Pimco High vs. Artisan High Income | Pimco High vs. Pace High Yield | Pimco High vs. Siit High Yield |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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