Correlation Between Franklin Federal and Pimco Income
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Pimco Income 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 Federal and Pimco Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Limited Term and Pimco Income Fund, you can compare the effects of market volatilities on Franklin Federal and Pimco Income 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 Federal with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Pimco Income.
Diversification Opportunities for Franklin Federal and Pimco Income
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Pimco is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Pimco Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income and Franklin Federal 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 Federal Limited Term are associated (or correlated) with Pimco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Income has no effect on the direction of Franklin Federal i.e., Franklin Federal and Pimco Income go up and down completely randomly.
Pair Corralation between Franklin Federal and Pimco Income
Assuming the 90 days horizon Franklin Federal is expected to generate 2.53 times less return on investment than Pimco Income. But when comparing it to its historical volatility, Franklin Federal Limited Term is 1.87 times less risky than Pimco Income. It trades about 0.19 of its potential returns per unit of risk. Pimco Income Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,053 in Pimco Income Fund on September 2, 2024 and sell it today you would earn a total of 13.00 from holding Pimco Income Fund or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Pimco Income Fund
Performance |
| Timeline |
| Franklin Federal Lim |
| Pimco Income |
Franklin Federal and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Pimco Income
The main advantage of trading using opposite Franklin Federal and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Pimco Income 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 Income will offset losses from the drop in Pimco Income's long position.| Franklin Federal vs. Eip Growth And | Franklin Federal vs. Kinetics Small Cap | Franklin Federal vs. Chase Growth Fund | Franklin Federal vs. T Rowe Price |
| Pimco Income vs. Siit Ultra Short | Pimco Income vs. Sterling Capital Short | Pimco Income vs. Chartwell Short Duration | Pimco Income vs. Franklin Federal Limited Term |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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