Correlation Between Franklin New and Western Asset
Can any of the company-specific risk be diversified away by investing in both Franklin New 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 New 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 New York and Western Asset Intermediate, you can compare the effects of market volatilities on Franklin New 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 New with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin New and Western Asset.
Diversification Opportunities for Franklin New and Western Asset
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Western is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Franklin New York and Western Asset Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Interm and Franklin New 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 New York 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 Interm has no effect on the direction of Franklin New i.e., Franklin New and Western Asset go up and down completely randomly.
Pair Corralation between Franklin New and Western Asset
Assuming the 90 days horizon Franklin New York is expected to generate 0.77 times more return on investment than Western Asset. However, Franklin New York is 1.3 times less risky than Western Asset. It trades about 0.17 of its potential returns per unit of risk. Western Asset Intermediate is currently generating about 0.08 per unit of risk. If you would invest 1,075 in Franklin New York on August 28, 2024 and sell it today you would earn a total of 9.00 from holding Franklin New York or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin New York vs. Western Asset Intermediate
Performance |
| Timeline |
| Franklin New York |
| Western Asset Interm |
Franklin New and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin New and Western Asset
The main advantage of trading using opposite Franklin New and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin New 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 New vs. Vanguard Short Term Government | Franklin New vs. Gamco Global Telecommunications | Franklin New vs. The National Tax Free | Franklin New vs. Dws Government Money |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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