Correlation Between Pimco New and Franklin Government
Can any of the company-specific risk be diversified away by investing in both Pimco New and Franklin Government 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 New and Franklin Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco New York and Franklin Government Money, you can compare the effects of market volatilities on Pimco New and Franklin Government 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 New with a short position of Franklin Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco New and Franklin Government.
Diversification Opportunities for Pimco New and Franklin Government
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pimco and Franklin is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money and Pimco New 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 New York are associated (or correlated) with Franklin Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of Pimco New i.e., Pimco New and Franklin Government go up and down completely randomly.
Pair Corralation between Pimco New and Franklin Government
Assuming the 90 days horizon Pimco New York is expected to generate 1.78 times more return on investment than Franklin Government. However, Pimco New is 1.78 times more volatile than Franklin Government Money. It trades about 0.08 of its potential returns per unit of risk. Franklin Government Money is currently generating about 0.13 per unit of risk. If you would invest 997.00 in Pimco New York on September 3, 2024 and sell it today you would earn a total of 97.00 from holding Pimco New York or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco New York vs. Franklin Government Money
Performance |
| Timeline |
| Pimco New York |
| Franklin Government Money |
Pimco New and Franklin Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco New and Franklin Government
The main advantage of trading using opposite Pimco New and Franklin Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco New position performs unexpectedly, Franklin Government 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 Government will offset losses from the drop in Franklin Government's long position.| Pimco New vs. Royce Opportunity Fund | Pimco New vs. Amg River Road | Pimco New vs. Pace Smallmedium Value | Pimco New vs. Mutual Of America |
| Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard 500 Index | Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard Total Stock |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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