Correlation Between Pimco Energy and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Pimco Energy and Franklin Federal 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 Pimco Energy and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Energy Tactical and Franklin Federal Tax Free, you can compare the effects of market volatilities on Pimco Energy and Franklin Federal 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 Pimco Energy with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Energy and Franklin Federal.
Diversification Opportunities for Pimco Energy and Franklin Federal
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pimco and Franklin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Energy Tactical and Franklin Federal Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Tax and Pimco Energy 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 Pimco Energy Tactical are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax has no effect on the direction of Pimco Energy i.e., Pimco Energy and Franklin Federal go up and down completely randomly.
Pair Corralation between Pimco Energy and Franklin Federal
Considering the 90-day investment horizon Pimco Energy Tactical is expected to generate 23.05 times more return on investment than Franklin Federal. However, Pimco Energy is 23.05 times more volatile than Franklin Federal Tax Free. It trades about 0.08 of its potential returns per unit of risk. Franklin Federal Tax Free is currently generating about 0.07 per unit of risk. If you would invest 2,646 in Pimco Energy Tactical on October 25, 2024 and sell it today you would earn a total of 169.00 from holding Pimco Energy Tactical or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Pimco Energy Tactical vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Pimco Energy Tactical |
| Franklin Federal Tax |
Pimco Energy and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Energy and Franklin Federal
The main advantage of trading using opposite Pimco Energy and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Energy position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Pimco Energy vs. Vanguard Total Stock | Pimco Energy vs. Vanguard 500 Index | Pimco Energy vs. Vanguard Total Stock | Pimco Energy vs. Vanguard Total Stock |
| Franklin Federal vs. Pimco Energy Tactical | Franklin Federal vs. Salient Mlp Energy | Franklin Federal vs. Vanguard Energy Index | Franklin Federal vs. Fidelity Advisor Energy |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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