Correlation Between Pacific Funds and Franklin High
Can any of the company-specific risk be diversified away by investing in both Pacific Funds 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 Pacific Funds and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Funds Portfolio and Franklin High Yield, you can compare the effects of market volatilities on Pacific Funds 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 Pacific Funds with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Funds and Franklin High.
Diversification Opportunities for Pacific Funds and Franklin High
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pacific and Franklin is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Funds Portfolio 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 Pacific Funds 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 Pacific Funds Portfolio 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 Pacific Funds i.e., Pacific Funds and Franklin High go up and down completely randomly.
Pair Corralation between Pacific Funds and Franklin High
Assuming the 90 days horizon Pacific Funds Portfolio is expected to generate 1.7 times more return on investment than Franklin High. However, Pacific Funds is 1.7 times more volatile than Franklin High Yield. It trades about 0.1 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.1 per unit of risk. If you would invest 1,029 in Pacific Funds Portfolio on September 12, 2024 and sell it today you would earn a total of 199.00 from holding Pacific Funds Portfolio or generate 19.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Pacific Funds Portfolio vs. Franklin High Yield
Performance |
| Timeline |
| Pacific Funds Portfolio |
| Franklin High Yield |
Pacific Funds and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Funds and Franklin High
The main advantage of trading using opposite Pacific Funds and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Funds 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.| Pacific Funds vs. Franklin High Yield | Pacific Funds vs. Ambrus Core Bond | Pacific Funds vs. T Rowe Price | Pacific Funds vs. Multisector Bond Sma |
| Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. SCOR PK | Franklin High vs. Morningstar Unconstrained Allocation |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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