Correlation Between Franklin Templeton and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and Pacer Funds 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 Franklin Templeton and Pacer Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Templeton ETF and Pacer Funds Trust, you can compare the effects of market volatilities on Franklin Templeton and Pacer Funds 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 Franklin Templeton with a short position of Pacer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and Pacer Funds.
Diversification Opportunities for Franklin Templeton and Pacer Funds
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Pacer is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and Pacer Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Funds Trust and Franklin Templeton 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 Franklin Templeton ETF are associated (or correlated) with Pacer Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Funds Trust has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Pacer Funds go up and down completely randomly.
Pair Corralation between Franklin Templeton and Pacer Funds
Given the investment horizon of 90 days Franklin Templeton ETF is expected to under-perform the Pacer Funds. But the etf apears to be less risky and, when comparing its historical volatility, Franklin Templeton ETF is 1.25 times less risky than Pacer Funds. The etf trades about -0.05 of its potential returns per unit of risk. The Pacer Funds Trust is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,696 in Pacer Funds Trust on September 1, 2024 and sell it today you would earn a total of 416.00 from holding Pacer Funds Trust or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Templeton ETF vs. Pacer Funds Trust
Performance |
| Timeline |
| Franklin Templeton ETF |
| Pacer Funds Trust |
Franklin Templeton and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and Pacer Funds
The main advantage of trading using opposite Franklin Templeton and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, Pacer Funds 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 Pacer Funds will offset losses from the drop in Pacer Funds' long position.| Franklin Templeton vs. Xtrackers MSCI Emerging | Franklin Templeton vs. FlexShares Morningstar Emerging | Franklin Templeton vs. First Trust Emerging |
| Pacer Funds vs. Freedom Day Dividend | Pacer Funds vs. iShares MSCI China | Pacer Funds vs. iShares Dividend and | Pacer Funds vs. SmartETFs Dividend Builder |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |