Correlation Between Franklin High and Western Asset
Can any of the company-specific risk be diversified away by investing in both Franklin High and Western Asset 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 High and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Income and Western Asset Inflation, you can compare the effects of market volatilities on Franklin High and Western Asset 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 High with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Western Asset.
Diversification Opportunities for Franklin High and Western Asset
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Western is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation and Franklin High 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 High Income are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Franklin High i.e., Franklin High and Western Asset go up and down completely randomly.
Pair Corralation between Franklin High and Western Asset
Assuming the 90 days horizon Franklin High Income is expected to generate 0.93 times more return on investment than Western Asset. However, Franklin High Income is 1.07 times less risky than Western Asset. It trades about 0.0 of its potential returns per unit of risk. Western Asset Inflation is currently generating about -0.05 per unit of risk. If you would invest 175.00 in Franklin High Income on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Franklin High Income or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Income vs. Western Asset Inflation
Performance |
| Timeline |
| Franklin High Income |
| Western Asset Inflation |
Franklin High and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Western Asset
The main advantage of trading using opposite Franklin High and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Franklin High vs. Conservative Balanced Allocation | Franklin High vs. Calvert Conservative Allocation | Franklin High vs. Delaware Limited Term Diversified | Franklin High vs. Adams Diversified Equity |
| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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