Correlation Between Pacer Pacific and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both Pacer Pacific and Franklin Liberty 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 Pacific and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Pacific Asset and Franklin Liberty Senior, you can compare the effects of market volatilities on Pacer Pacific and Franklin Liberty 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 Pacific with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Pacific and Franklin Liberty.
Diversification Opportunities for Pacer Pacific and Franklin Liberty
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pacer and Franklin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Pacific Asset and Franklin Liberty Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Senior and Pacer Pacific 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 Pacific Asset are associated (or correlated) with Franklin Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Liberty Senior has no effect on the direction of Pacer Pacific i.e., Pacer Pacific and Franklin Liberty go up and down completely randomly.
Pair Corralation between Pacer Pacific and Franklin Liberty
Given the investment horizon of 90 days Pacer Pacific is expected to generate 8.45 times less return on investment than Franklin Liberty. In addition to that, Pacer Pacific is 1.55 times more volatile than Franklin Liberty Senior. It trades about 0.04 of its total potential returns per unit of risk. Franklin Liberty Senior is currently generating about 0.53 per unit of volatility. If you would invest 2,420 in Franklin Liberty Senior on August 28, 2024 and sell it today you would earn a total of 22.00 from holding Franklin Liberty Senior or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Pacific Asset vs. Franklin Liberty Senior
Performance |
| Timeline |
| Pacer Pacific Asset |
| Franklin Liberty Senior |
Pacer Pacific and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Pacific and Franklin Liberty
The main advantage of trading using opposite Pacer Pacific and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Pacific position performs unexpectedly, Franklin Liberty 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 Liberty will offset losses from the drop in Franklin Liberty's long position.| Pacer Pacific vs. Franklin Liberty Short | Pacer Pacific vs. SPDR Bloomberg Investment | Pacer Pacific vs. VanEck Investment Grade |
| Franklin Liberty vs. Franklin Liberty Short | Franklin Liberty vs. SPDR Bloomberg Investment | Franklin Liberty vs. VanEck Investment Grade |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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