Correlation Between Pimco Municipal and MFS Investment
Can any of the company-specific risk be diversified away by investing in both Pimco Municipal and MFS Investment 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 Municipal and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Municipal Income and MFS Investment Grade, you can compare the effects of market volatilities on Pimco Municipal and MFS Investment 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 Municipal with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Municipal and MFS Investment.
Diversification Opportunities for Pimco Municipal and MFS Investment
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and MFS is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Municipal Income and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade and Pimco 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 Pimco Municipal Income are associated (or correlated) with MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of Pimco Municipal i.e., Pimco Municipal and MFS Investment go up and down completely randomly.
Pair Corralation between Pimco Municipal and MFS Investment
Considering the 90-day investment horizon Pimco Municipal Income is expected to generate 1.85 times more return on investment than MFS Investment. However, Pimco Municipal is 1.85 times more volatile than MFS Investment Grade. It trades about 0.22 of its potential returns per unit of risk. MFS Investment Grade is currently generating about 0.14 per unit of risk. If you would invest 888.00 in Pimco Municipal Income on November 29, 2024 and sell it today you would earn a total of 39.00 from holding Pimco Municipal Income or generate 4.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pimco Municipal Income vs. MFS Investment Grade
Performance |
| Timeline |
| Pimco Municipal Income |
| MFS Investment Grade |
Pimco Municipal and MFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Municipal and MFS Investment
The main advantage of trading using opposite Pimco Municipal and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Municipal position performs unexpectedly, MFS Investment 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 Investment will offset losses from the drop in MFS Investment's long position.| Pimco Municipal vs. Pimco Municipal Income | Pimco Municipal vs. Nuveen Municipal High | Pimco Municipal vs. Nuveen Municipal Credit | Pimco Municipal vs. Nuveen Amt Free Municipal |
| MFS Investment vs. Eaton Vance National | MFS Investment vs. Nuveen California Select | MFS Investment vs. Federated Premier Municipal |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |