Correlation Between Pimco New and MFS High

Can any of the company-specific risk be diversified away by investing in both Pimco New and MFS High 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 High 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 High Yield, you can compare the effects of market volatilities on Pimco New and MFS High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco New and MFS High.

Diversification Opportunities for Pimco New and MFS High

0.68

Correlation Coefficient

Pimco New  MFS High

Poor diversification

The 3 months correlation between Pimco and MFS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and MFS High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Yield 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS High Yield has no effect on the direction of Pimco New i.e., Pimco New and MFS High go up and down completely randomly.

Pair Corralation between Pimco New and MFS High

Considering the 90-day investment horizon Pimco New is expected to generate 7.46 times less return on investment than MFS High. In addition to that, Pimco New is 1.01 times more volatile than MFS High Yield. It trades about 0.01 of its total potential returns per unit of risk. MFS High Yield is currently generating about 0.07 per unit of volatility. If you would invest  358.00  in MFS High Yield on September 5, 2024 and sell it today you would earn a total of  9.00  from holding MFS High Yield or generate 2.51% return on investment over 90 days.

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

Pimco New York  vs.  MFS High Yield

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 High Yield

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MFS High Yield are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, MFS High is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pimco New and MFS High

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

The idea behind Pimco New York and MFS High Yield 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.