Correlation Between Pimco New and MFS Investment
Can any of the company-specific risk be diversified away by investing in both Pimco New 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 New 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 New York and MFS Investment Grade, you can compare the effects of market volatilities on Pimco New 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 New with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco New and MFS Investment.
Diversification Opportunities for Pimco New and MFS Investment
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and MFS is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York 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 New 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 New York 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 New i.e., Pimco New and MFS Investment go up and down completely randomly.
Pair Corralation between Pimco New and MFS Investment
Considering the 90-day investment horizon Pimco New is expected to generate 1.85 times less return on investment than MFS Investment. In addition to that, Pimco New is 1.27 times more volatile than MFS Investment Grade. It trades about 0.06 of its total potential returns per unit of risk. MFS Investment Grade is currently generating about 0.14 per unit of volatility. If you would invest 689.00 in MFS Investment Grade on August 24, 2024 and sell it today you would earn a total of 123.00 from holding MFS Investment Grade or generate 17.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Pimco New York vs. MFS Investment Grade
Performance |
| Timeline |
| Pimco New York |
| MFS Investment Grade |
Pimco New and MFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco New and MFS Investment
The main advantage of trading using opposite Pimco New and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco New 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 New vs. MFS Investment Grade | Pimco New vs. Eaton Vance National | Pimco New vs. Blackrock Muniyield Quality | Pimco New vs. Munivest Fund |
| MFS Investment vs. Invesco High Income | 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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