Correlation Between Pimco Municipal and MFS Charter
Can any of the company-specific risk be diversified away by investing in both Pimco Municipal and MFS Charter 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 Charter 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 Charter Income, you can compare the effects of market volatilities on Pimco Municipal and MFS Charter 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 Charter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Municipal and MFS Charter.
Diversification Opportunities for Pimco Municipal and MFS Charter
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and MFS is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Municipal Income and MFS Charter Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Charter Income 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 Charter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Charter Income has no effect on the direction of Pimco Municipal i.e., Pimco Municipal and MFS Charter go up and down completely randomly.
Pair Corralation between Pimco Municipal and MFS Charter
Considering the 90-day investment horizon Pimco Municipal is expected to generate 1.99 times less return on investment than MFS Charter. In addition to that, Pimco Municipal is 1.53 times more volatile than MFS Charter Income. It trades about 0.02 of its total potential returns per unit of risk. MFS Charter Income is currently generating about 0.07 per unit of volatility. If you would invest 538.00 in MFS Charter Income on August 31, 2024 and sell it today you would earn a total of 93.50 from holding MFS Charter Income or generate 17.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Municipal Income vs. MFS Charter Income
Performance |
| Timeline |
| Pimco Municipal Income |
| MFS Charter Income |
Pimco Municipal and MFS Charter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Municipal and MFS Charter
The main advantage of trading using opposite Pimco Municipal and MFS Charter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Municipal position performs unexpectedly, MFS Charter 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 Charter will offset losses from the drop in MFS Charter's long position.| Pimco Municipal vs. Pimco Municipal Income | Pimco Municipal vs. Pimco Municipal Income | Pimco Municipal vs. Pimco California Municipal | Pimco Municipal vs. Pimco New York |
| MFS Charter vs. MFS High Income | MFS Charter vs. MFS Investment Grade | MFS Charter vs. Eaton Vance National | MFS Charter vs. Invesco High Income |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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