Correlation Between Franklin High and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Franklin High and Legg Mason 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 Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Yield and Legg Mason Bw, you can compare the effects of market volatilities on Franklin High and Legg Mason 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 Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Legg Mason.
Diversification Opportunities for Franklin High and Legg Mason
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Legg is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw 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 Yield are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Bw has no effect on the direction of Franklin High i.e., Franklin High and Legg Mason go up and down completely randomly.
Pair Corralation between Franklin High and Legg Mason
Assuming the 90 days horizon Franklin High Yield is expected to generate 0.46 times more return on investment than Legg Mason. However, Franklin High Yield is 2.19 times less risky than Legg Mason. It trades about 0.09 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.0 per unit of risk. If you would invest 800.00 in Franklin High Yield on September 12, 2024 and sell it today you would earn a total of 117.00 from holding Franklin High Yield or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. Legg Mason Bw
Performance |
| Timeline |
| Franklin High Yield |
| Legg Mason Bw |
Franklin High and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Legg Mason
The main advantage of trading using opposite Franklin High and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Franklin High vs. Cref Money Market | Franklin High vs. Chestnut Street Exchange | Franklin High vs. Aig Government Money | Franklin High vs. Matson Money Equity |
| Legg Mason vs. Ishares Municipal Bond | Legg Mason vs. Franklin High Yield | Legg Mason vs. Oklahoma Municipal Fund | Legg Mason vs. Ab Impact Municipal |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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