Correlation Between Franklin Adjustable and Pimco Income

Can any of the company-specific risk be diversified away by investing in both Franklin Adjustable 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 Adjustable 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 Adjustable Government and Pimco Income Fund, you can compare the effects of market volatilities on Franklin Adjustable 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 Adjustable with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Pimco Income.

Diversification Opportunities for Franklin Adjustable and Pimco Income

0.58

Correlation Coefficient

Franklin Adjustable  Pimco Income

Very weak diversification

The 3 months correlation between Franklin and Pimco is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government 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 Adjustable 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 Adjustable Government 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 Adjustable i.e., Franklin Adjustable and Pimco Income go up and down completely randomly.

Pair Corralation between Franklin Adjustable and Pimco Income

Assuming the 90 days horizon Franklin Adjustable Government is not expected to generate positive returns. However, Franklin Adjustable Government is 3.13 times less risky than Pimco Income. It waists most of its returns potential to compensate for thr risk taken. Pimco Income is generating about -0.03 per unit of risk. If you would invest  753.00  in Franklin Adjustable Government on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Franklin Adjustable Government or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Franklin Adjustable Government  vs.  Pimco Income Fund

Franklin Adjustable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Adjustable Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Franklin Adjustable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Adjustable and Pimco Income

The main advantage of trading using opposite Franklin Adjustable and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Adjustable 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.

The idea behind Franklin Adjustable Government and Pimco Income Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.