Correlation Between Mfs Utilities and Pimco Dynamic

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

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

Diversification Opportunities for Mfs Utilities and Pimco Dynamic

0.72

Correlation Coefficient

Mfs Utilities  Pimco Dynamic

Poor diversification

The 3 months correlation between Mfs and Pimco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Utilities Fund and Pimco Dynamic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dynamic Income and Mfs Utilities 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 Utilities Fund are associated (or correlated) with Pimco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dynamic Income has no effect on the direction of Mfs Utilities i.e., Mfs Utilities and Pimco Dynamic go up and down completely randomly.

Pair Corralation between Mfs Utilities and Pimco Dynamic

Assuming the 90 days horizon Mfs Utilities is expected to generate 3.91 times less return on investment than Pimco Dynamic. In addition to that, Mfs Utilities is 1.05 times more volatile than Pimco Dynamic Income. It trades about 0.01 of its total potential returns per unit of risk. Pimco Dynamic Income is currently generating about 0.03 per unit of volatility. If you would invest  1,681  in Pimco Dynamic Income on February 26, 2024 and sell it today you would earn a total of  238.00  from holding Pimco Dynamic Income or generate 14.16% return on investment over 90 days.

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

Mfs Utilities Fund  vs.  Pimco Dynamic Income

Mfs Utilities

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Utilities Fund are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady forward indicators, Mfs Utilities showed solid returns over the last few months and may actually be approaching a breakup point.

Pimco Dynamic Income

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Mfs Utilities and Pimco Dynamic

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

The idea behind Mfs Utilities Fund and Pimco Dynamic 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.