Correlation Between PIMCO Enhanced and Franklin Liberty

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

By analyzing existing cross correlation between PIMCO Enhanced Low and Franklin Liberty Short, you can compare the effects of market volatilities on PIMCO Enhanced and Franklin Liberty 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 Enhanced with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Enhanced and Franklin Liberty.

Diversification Opportunities for PIMCO Enhanced and Franklin Liberty

0.96

Correlation Coefficient

PIMCO Enhanced  Franklin Liberty

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 Enhanced Low and Franklin Liberty Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Short and PIMCO Enhanced 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 Enhanced Low are associated (or correlated) with Franklin Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Liberty Short has no effect on the direction of PIMCO Enhanced i.e., PIMCO Enhanced and Franklin Liberty go up and down completely randomly.

Pair Corralation between PIMCO Enhanced and Franklin Liberty

Given the investment horizon of 90 days PIMCO Enhanced Low is expected to generate 0.88 times more return on investment than Franklin Liberty. However, PIMCO Enhanced Low is 1.13 times less risky than Franklin Liberty. It trades about 0.18 of its potential returns per unit of risk. Franklin Liberty Short is currently generating about 0.15 per unit of risk. If you would invest  9,438  in PIMCO Enhanced Low on May 6, 2025 and sell it today you would earn a total of  135.00  from holding PIMCO Enhanced Low or generate 1.43% return on investment over 90 days.

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

PIMCO Enhanced Low  vs.  Franklin Liberty Short

PIMCO Enhanced Low

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Enhanced Low are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PIMCO Enhanced is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Franklin Liberty Short

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Liberty Short are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Franklin Liberty is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PIMCO Enhanced and Franklin Liberty

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

The idea behind PIMCO Enhanced Low and Franklin Liberty Short 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.