Correlation Between Pacer Funds and Franklin International
Can any of the company-specific risk be diversified away by investing in both Pacer Funds and Franklin International 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 Pacer Funds and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Funds Trust and Franklin International Core, you can compare the effects of market volatilities on Pacer Funds and Franklin International 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 Pacer Funds with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Funds and Franklin International.
Diversification Opportunities for Pacer Funds and Franklin International
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pacer and Franklin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Funds Trust and Franklin International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and Pacer Funds 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 Pacer Funds Trust are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Pacer Funds i.e., Pacer Funds and Franklin International go up and down completely randomly.
Pair Corralation between Pacer Funds and Franklin International
Given the investment horizon of 90 days Pacer Funds Trust is expected to generate 0.86 times more return on investment than Franklin International. However, Pacer Funds Trust is 1.17 times less risky than Franklin International. It trades about 0.12 of its potential returns per unit of risk. Franklin International Core is currently generating about -0.04 per unit of risk. If you would invest 1,946 in Pacer Funds Trust on September 1, 2024 and sell it today you would earn a total of 38.00 from holding Pacer Funds Trust or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pacer Funds Trust vs. Franklin International Core
Performance |
| Timeline |
| Pacer Funds Trust |
| Franklin International |
Pacer Funds and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Funds and Franklin International
The main advantage of trading using opposite Pacer Funds and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Funds position performs unexpectedly, Franklin International 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 Franklin International will offset losses from the drop in Franklin International's long position.| Pacer Funds vs. Invesco SP International | Pacer Funds vs. Invesco SP International | Pacer Funds vs. Invesco FTSE RAFI | Pacer Funds vs. Invesco SP Emerging |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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