Correlation Between MFS Investment and Pioneer Floating

Can any of the company-specific risk be diversified away by investing in both MFS Investment and Pioneer Floating 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 MFS Investment and Pioneer Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MFS Investment Grade and Pioneer Floating Rate, you can compare the effects of market volatilities on MFS Investment and Pioneer Floating 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 MFS Investment with a short position of Pioneer Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Pioneer Floating.

Diversification Opportunities for MFS Investment and Pioneer Floating

0.63

Correlation Coefficient

MFS Investment  Pioneer Floating

Poor diversification

The 3 months correlation between MFS and Pioneer is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Pioneer Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Floating Rate and MFS Investment 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 MFS Investment Grade are associated (or correlated) with Pioneer Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Floating Rate has no effect on the direction of MFS Investment i.e., MFS Investment and Pioneer Floating go up and down completely randomly.

Pair Corralation between MFS Investment and Pioneer Floating

Considering the 90-day investment horizon MFS Investment Grade is expected to generate 2.31 times more return on investment than Pioneer Floating. However, MFS Investment is 2.31 times more volatile than Pioneer Floating Rate. It trades about 0.17 of its potential returns per unit of risk. Pioneer Floating Rate is currently generating about -0.02 per unit of risk. If you would invest  798.00  in MFS Investment Grade on December 2, 2024 and sell it today you would earn a total of  15.00  from holding MFS Investment Grade or generate 1.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MFS Investment Grade  vs.  Pioneer Floating Rate

MFS Investment Grade

Risk-Adjusted Performance

Very Weak

Over the last 90 days MFS Investment Grade has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, MFS Investment is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pioneer Floating Rate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pioneer Floating Rate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Pioneer Floating is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MFS Investment and Pioneer Floating

The main advantage of trading using opposite MFS Investment and Pioneer Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, Pioneer Floating 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 Pioneer Floating will offset losses from the drop in Pioneer Floating's long position.

The idea behind MFS Investment Grade and Pioneer Floating Rate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.