Correlation Between Franklin Growth and Pimco Energy
Can any of the company-specific risk be diversified away by investing in both Franklin Growth and Pimco Energy 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 Growth and Pimco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Growth Fund and Pimco Energy Tactical, you can compare the effects of market volatilities on Franklin Growth and Pimco Energy 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 Growth with a short position of Pimco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Pimco Energy.
Diversification Opportunities for Franklin Growth and Pimco Energy
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Pimco is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Fund and Pimco Energy Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Energy Tactical and Franklin Growth 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 Growth Fund are associated (or correlated) with Pimco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Energy Tactical has no effect on the direction of Franklin Growth i.e., Franklin Growth and Pimco Energy go up and down completely randomly.
Pair Corralation between Franklin Growth and Pimco Energy
Assuming the 90 days horizon Franklin Growth is expected to generate 6.07 times less return on investment than Pimco Energy. But when comparing it to its historical volatility, Franklin Growth Fund is 2.3 times less risky than Pimco Energy. It trades about 0.03 of its potential returns per unit of risk. Pimco Energy Tactical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,063 in Pimco Energy Tactical on November 3, 2024 and sell it today you would earn a total of 549.00 from holding Pimco Energy Tactical or generate 26.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Growth Fund vs. Pimco Energy Tactical
Performance |
| Timeline |
| Franklin Growth |
| Pimco Energy Tactical |
Franklin Growth and Pimco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Growth and Pimco Energy
The main advantage of trading using opposite Franklin Growth and Pimco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth position performs unexpectedly, Pimco Energy 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 Energy will offset losses from the drop in Pimco Energy's long position.| Franklin Growth vs. Voya Target Retirement | Franklin Growth vs. College Retirement Equities | Franklin Growth vs. Wilmington Trust Retirement | Franklin Growth vs. Calvert Moderate Allocation |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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