Correlation Between Franklin Natural and Pimco Total
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Pimco Total 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 Natural and Pimco Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Natural Resources and Pimco Total Return, you can compare the effects of market volatilities on Franklin Natural and Pimco Total 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 Natural with a short position of Pimco Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Pimco Total.
Diversification Opportunities for Franklin Natural and Pimco Total
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Pimco is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Pimco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Total Return and Franklin Natural 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 Natural Resources are associated (or correlated) with Pimco Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Total Return has no effect on the direction of Franklin Natural i.e., Franklin Natural and Pimco Total go up and down completely randomly.
Pair Corralation between Franklin Natural and Pimco Total
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 2.25 times more return on investment than Pimco Total. However, Franklin Natural is 2.25 times more volatile than Pimco Total Return. It trades about 0.22 of its potential returns per unit of risk. Pimco Total Return is currently generating about 0.13 per unit of risk. If you would invest 3,041 in Franklin Natural Resources on September 1, 2024 and sell it today you would earn a total of 118.00 from holding Franklin Natural Resources or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Pimco Total Return
Performance |
| Timeline |
| Franklin Natural Res |
| Pimco Total Return |
Franklin Natural and Pimco Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Pimco Total
The main advantage of trading using opposite Franklin Natural and Pimco Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Pimco Total 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 Total will offset losses from the drop in Pimco Total's long position.| Franklin Natural vs. Lord Abbett Small | Franklin Natural vs. Great West Loomis Sayles | Franklin Natural vs. Amg River Road | Franklin Natural vs. Heartland Value Plus |
| Pimco Total vs. Goehring Rozencwajg Resources | Pimco Total vs. Franklin Natural Resources | Pimco Total vs. Tortoise Energy Independence | Pimco Total vs. Icon Natural Resources |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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