Correlation Between MFS Active and PIMCO Enhanced

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

By analyzing existing cross correlation between MFS Active Core and PIMCO Enhanced Short, you can compare the effects of market volatilities on MFS Active and PIMCO Enhanced 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 Active with a short position of PIMCO Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Active and PIMCO Enhanced.

Diversification Opportunities for MFS Active and PIMCO Enhanced

0.67

Correlation Coefficient

MFS Active  PIMCO Enhanced

Poor diversification

The 3 months correlation between MFS and PIMCO is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding MFS Active Core and PIMCO Enhanced Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Enhanced Short and MFS Active 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 Active Core are associated (or correlated) with PIMCO Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Enhanced Short has no effect on the direction of MFS Active i.e., MFS Active and PIMCO Enhanced go up and down completely randomly.

Pair Corralation between MFS Active and PIMCO Enhanced

Given the investment horizon of 90 days MFS Active Core is expected to generate 12.42 times more return on investment than PIMCO Enhanced. However, MFS Active is 12.42 times more volatile than PIMCO Enhanced Short. It trades about 0.14 of its potential returns per unit of risk. PIMCO Enhanced Short is currently generating about 0.88 per unit of risk. If you would invest  2,427  in MFS Active Core on December 19, 2024 and sell it today you would earn a total of  55.00  from holding MFS Active Core or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

MFS Active Core  vs.  PIMCO Enhanced Short

MFS Active Core

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Active Core are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MFS Active is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

PIMCO Enhanced Short

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Enhanced Short are ranked lower than 69 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PIMCO Enhanced is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MFS Active and PIMCO Enhanced

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

The idea behind MFS Active Core and PIMCO Enhanced Short 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.