Correlation Between Pimco New and Franklin High
Can any of the company-specific risk be diversified away by investing in both Pimco New and Franklin High 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 High 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 High Yield, you can compare the effects of market volatilities on Pimco New and Franklin High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco New and Franklin High.
Diversification Opportunities for Pimco New and Franklin High
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pimco and Franklin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Pimco New i.e., Pimco New and Franklin High go up and down completely randomly.
Pair Corralation between Pimco New and Franklin High
Assuming the 90 days horizon Pimco New is expected to generate 2.21 times less return on investment than Franklin High. But when comparing it to its historical volatility, Pimco New York is 1.31 times less risky than Franklin High. It trades about 0.08 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 841.00 in Franklin High Yield on September 12, 2024 and sell it today you would earn a total of 76.00 from holding Franklin High Yield or generate 9.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco New York vs. Franklin High Yield
Performance |
| Timeline |
| Pimco New York |
| Franklin High Yield |
Pimco New and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco New and Franklin High
The main advantage of trading using opposite Pimco New and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco New position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| Pimco New vs. Franklin High Yield | Pimco New vs. Ishares Municipal Bond | Pimco New vs. Ab Impact Municipal | Pimco New vs. T Rowe Price |
| Franklin High vs. Cref Money Market | Franklin High vs. Chestnut Street Exchange | Franklin High vs. Aig Government Money | Franklin High vs. Matson Money Equity |
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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