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

-0.02

Correlation Coefficient

Pimco New  MFS Investment

Good diversification

The 3 months correlation between Pimco and MFS is -0.02. 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 York is expected to under-perform the MFS Investment. But the fund apears to be less risky and, when comparing its historical volatility, Pimco New York is 1.37 times less risky than MFS Investment. The fund trades about -0.27 of its potential returns per unit of risk. The MFS Investment Grade is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  808.00  in MFS Investment Grade on September 15, 2024 and sell it today you would earn a total of  5.00  from holding MFS Investment Grade or generate 0.62% return on investment over 90 days.

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

Pimco New York  vs.  MFS Investment Grade

Pimco New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco New York has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Pimco New is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

MFS Investment Grade

Risk-Adjusted Performance

0 of 100

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 latest stock price confusion, may contribute to short-horizon losses for the traders.

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.

The idea behind Pimco New York and MFS Investment Grade 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 CEOs Directory module to screen CEOs from public companies around the world.