Correlation Between Pioneer Municipal and Mfs Municipal

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

By analyzing existing cross correlation between Pioneer Municipal High and Mfs Municipal Income, you can compare the effects of market volatilities on Pioneer Municipal and Mfs Municipal 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 Pioneer Municipal with a short position of Mfs Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer Municipal and Mfs Municipal.

Diversification Opportunities for Pioneer Municipal and Mfs Municipal

0.94

Correlation Coefficient

Pioneer Municipal  Mfs Municipal

Almost no diversification

The 3 months correlation between Pioneer and Mfs is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Municipal High and Mfs Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Municipal Income and Pioneer 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 Pioneer Municipal High are associated (or correlated) with Mfs Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Municipal Income has no effect on the direction of Pioneer Municipal i.e., Pioneer Municipal and Mfs Municipal go up and down completely randomly.

Pair Corralation between Pioneer Municipal and Mfs Municipal

Assuming the 90 days horizon Pioneer Municipal High is expected to under-perform the Mfs Municipal. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pioneer Municipal High is 1.28 times less risky than Mfs Municipal. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Mfs Municipal Income is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  610.00  in Mfs Municipal Income on December 28, 2024 and sell it today you would lose (14.00) from holding Mfs Municipal Income or give up 2.3% of portfolio value over 90 days.

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

Pioneer Municipal High  vs.  Mfs Municipal Income

Pioneer Municipal High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pioneer Municipal High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Pioneer Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Municipal Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Municipal Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Mfs Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pioneer Municipal and Mfs Municipal

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

The idea behind Pioneer Municipal High and Mfs Municipal Income 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.