Correlation Between Pfg American and MFS Municipal

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

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

Diversification Opportunities for Pfg American and MFS Municipal

0.76

Correlation Coefficient

Pfg American  MFS Municipal

Poor diversification

The 3 months correlation between Pfg and MFS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pfg American Funds 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 Pfg American 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 Pfg American Funds 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 Pfg American i.e., Pfg American and MFS Municipal go up and down completely randomly.

Pair Corralation between Pfg American and MFS Municipal

Assuming the 90 days horizon Pfg American is expected to generate 6.23 times less return on investment than MFS Municipal. But when comparing it to its historical volatility, Pfg American Funds is 3.93 times less risky than MFS Municipal. It trades about 0.09 of its potential returns per unit of risk. MFS Municipal Income is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  510.00  in MFS Municipal Income on September 5, 2025 and sell it today you would earn a total of  32.00  from holding MFS Municipal Income or generate 6.27% return on investment over 90 days.

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

Pfg American Funds  vs.  MFS Municipal Income

Pfg American Funds

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Pfg American Funds are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pfg American 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Municipal Income are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, MFS Municipal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pfg American and MFS Municipal

The main advantage of trading using opposite Pfg American and MFS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfg American 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 Pfg American Funds 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.