Correlation Between Franklin Liberty and PIMCO Enhanced
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and PIMCO Enhanced 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 Liberty and PIMCO Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Liberty Ultra and PIMCO Enhanced Short, you can compare the effects of market volatilities on Franklin Liberty and PIMCO Enhanced 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 Liberty with a short position of PIMCO Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and PIMCO Enhanced.
Diversification Opportunities for Franklin Liberty and PIMCO Enhanced
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and PIMCO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Ultra and PIMCO Enhanced Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Enhanced Short and Franklin Liberty 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 Liberty Ultra are associated (or correlated) with PIMCO Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Enhanced Short has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and PIMCO Enhanced go up and down completely randomly.
Pair Corralation between Franklin Liberty and PIMCO Enhanced
Given the investment horizon of 90 days Franklin Liberty is expected to generate 1.05 times less return on investment than PIMCO Enhanced. In addition to that, Franklin Liberty is 4.12 times more volatile than PIMCO Enhanced Short. It trades about 0.18 of its total potential returns per unit of risk. PIMCO Enhanced Short is currently generating about 0.8 per unit of volatility. If you would invest 9,538 in PIMCO Enhanced Short on November 3, 2024 and sell it today you would earn a total of 538.00 from holding PIMCO Enhanced Short or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Liberty Ultra vs. PIMCO Enhanced Short
Performance |
| Timeline |
| Franklin Liberty Ultra |
| PIMCO Enhanced Short |
Franklin Liberty and PIMCO Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and PIMCO Enhanced
The main advantage of trading using opposite Franklin Liberty and PIMCO Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, PIMCO Enhanced 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 Enhanced will offset losses from the drop in PIMCO Enhanced's long position.| Franklin Liberty vs. VanEck Vectors Moodys | Franklin Liberty vs. Valued Advisers Trust | Franklin Liberty vs. Xtrackers California Municipal | Franklin Liberty vs. Principal Exchange Traded Funds |
| PIMCO Enhanced vs. VanEck Vectors Moodys | PIMCO Enhanced vs. Valued Advisers Trust | PIMCO Enhanced vs. Xtrackers California Municipal | PIMCO Enhanced vs. Principal Exchange Traded Funds |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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