Correlation Between Franklin Income and Western Asset
Can any of the company-specific risk be diversified away by investing in both Franklin Income 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 Income 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 Income and Western Asset Imf, you can compare the effects of market volatilities on Franklin Income 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 Income with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Income and Western Asset.
Diversification Opportunities for Franklin Income and Western Asset
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Western is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Income and Western Asset Imf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Imf and Franklin Income 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 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 Imf has no effect on the direction of Franklin Income i.e., Franklin Income and Western Asset go up and down completely randomly.
Pair Corralation between Franklin Income and Western Asset
Assuming the 90 days horizon Franklin Income is expected to generate 3.14 times less return on investment than Western Asset. But when comparing it to its historical volatility, Franklin Income is 1.46 times less risky than Western Asset. It trades about 0.1 of its potential returns per unit of risk. Western Asset Imf is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 791.00 in Western Asset Imf on August 30, 2024 and sell it today you would earn a total of 21.00 from holding Western Asset Imf or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Income vs. Western Asset Imf
Performance |
| Timeline |
| Franklin Income |
| Western Asset Imf |
Franklin Income and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Income and Western Asset
The main advantage of trading using opposite Franklin Income and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Income 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 Income vs. Franklin Mutual Beacon | Franklin Income vs. Templeton Developing Markets | Franklin Income vs. Franklin Mutual Global | Franklin Income vs. Franklin Mutual Global |
| Western Asset vs. Carlyle Secured Lending | Western Asset vs. Sixth Street Specialty | Western Asset vs. Golub Capital BDC | Western Asset vs. Fidus Investment Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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