Correlation Between PIMCO Enhanced and MFS Active

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

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

Diversification Opportunities for PIMCO Enhanced and MFS Active

-0.17

Correlation Coefficient

PIMCO Enhanced  MFS Active

Good diversification

The 3 months correlation between PIMCO and MFS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Enhanced Short and MFS Active Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Active Exchange and PIMCO Enhanced 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 Enhanced Short are associated (or correlated) with MFS Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Active Exchange has no effect on the direction of PIMCO Enhanced i.e., PIMCO Enhanced and MFS Active go up and down completely randomly.

Pair Corralation between PIMCO Enhanced and MFS Active

Given the investment horizon of 90 days PIMCO Enhanced is expected to generate 6733.7 times less return on investment than MFS Active. But when comparing it to its historical volatility, PIMCO Enhanced Short is 17830.65 times less risky than MFS Active. It trades about 1.0 of its potential returns per unit of risk. MFS Active Exchange is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  0.00  in MFS Active Exchange on September 14, 2024 and sell it today you would earn a total of  2,488  from holding MFS Active Exchange or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	11.11%
Values	Daily Returns

PIMCO Enhanced Short  vs.  MFS Active Exchange

PIMCO Enhanced Short

Risk-Adjusted Performance

78 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Enhanced Short are ranked lower than 78 (%) 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.

MFS Active Exchange

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Active Exchange are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, MFS Active sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PIMCO Enhanced and MFS Active

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

The idea behind PIMCO Enhanced Short and MFS Active Exchange 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.