Correlation Between Mfs Value and PIMCO 1
Can any of the company-specific risk be diversified away by investing in both Mfs Value and PIMCO 1 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 Value and PIMCO 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Value Fund and PIMCO 1 5 Year, you can compare the effects of market volatilities on Mfs Value and PIMCO 1 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 Value with a short position of PIMCO 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Value and PIMCO 1.
Diversification Opportunities for Mfs Value and PIMCO 1
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 Value Fund and PIMCO 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO 1 5 and Mfs Value 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 Value Fund are associated (or correlated) with PIMCO 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO 1 5 has no effect on the direction of Mfs Value i.e., Mfs Value and PIMCO 1 go up and down completely randomly.
Pair Corralation between Mfs Value and PIMCO 1
Assuming the 90 days horizon Mfs Value Fund is expected to under-perform the PIMCO 1. In addition to that, Mfs Value is 4.25 times more volatile than PIMCO 1 5 Year. It trades about -0.2 of its total potential returns per unit of risk. PIMCO 1 5 Year is currently generating about -0.11 per unit of volatility. If you would invest 5,142 in PIMCO 1 5 Year on January 27, 2024 and sell it today you would lose (17.00) from holding PIMCO 1 5 Year or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Value Fund vs. PIMCO 1 5 Year
Performance |
| Timeline |
| Mfs Value Fund |
| PIMCO 1 5 |
Mfs Value and PIMCO 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Value and PIMCO 1
The main advantage of trading using opposite Mfs Value and PIMCO 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Value position performs unexpectedly, PIMCO 1 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 1 will offset losses from the drop in PIMCO 1's long position.| Mfs Value vs. Mfs Prudent Investor | Mfs Value vs. Mfs Prudent Investor | Mfs Value vs. Mfs Prudent Investor | Mfs Value vs. Mfs Prudent Investor |
| PIMCO 1 vs. iShares iBoxx Investment | PIMCO 1 vs. iShares 1 3 Year | PIMCO 1 vs. iShares 7 10 Year | PIMCO 1 vs. iShares Core Aggregate |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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