Correlation Between Pioneer Bond and Franklin Total

Can any of the company-specific risk be diversified away by investing in both Pioneer Bond and Franklin Total 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 Pioneer Bond and Franklin Total into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pioneer Bond Fund and Franklin Total Return, you can compare the effects of market volatilities on Pioneer Bond and Franklin Total 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 Pioneer Bond with a short position of Franklin Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer Bond and Franklin Total.

Diversification Opportunities for Pioneer Bond and Franklin Total

0.96

Correlation Coefficient

Pioneer Bond  Franklin Total

Almost no diversification

The 3 months correlation between Pioneer and Franklin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Bond Fund and Franklin Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Total Return and Pioneer Bond 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 Pioneer Bond Fund are associated (or correlated) with Franklin Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Total Return has no effect on the direction of Pioneer Bond i.e., Pioneer Bond and Franklin Total go up and down completely randomly.

Pair Corralation between Pioneer Bond and Franklin Total

Assuming the 90 days horizon Pioneer Bond Fund is expected to under-perform the Franklin Total. In addition to that, Pioneer Bond is 1.1 times more volatile than Franklin Total Return. It trades about -0.07 of its total potential returns per unit of risk. Franklin Total Return is currently generating about -0.08 per unit of volatility. If you would invest  856.00  in Franklin Total Return on September 12, 2024 and sell it today you would lose (13.00) from holding Franklin Total Return or give up 1.52% of portfolio value over 90 days.

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

Pioneer Bond Fund  vs.  Franklin Total Return

Pioneer Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Franklin Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pioneer Bond and Franklin Total

The main advantage of trading using opposite Pioneer Bond and Franklin Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer Bond position performs unexpectedly, Franklin Total 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 Total will offset losses from the drop in Franklin Total's long position.

The idea behind Pioneer Bond Fund and Franklin Total Return 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.