Correlation Between Franklin Small and Clearbridge International
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Clearbridge International 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 Small and Clearbridge International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Small Cap and Clearbridge International Growth, you can compare the effects of market volatilities on Franklin Small and Clearbridge International 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 Small with a short position of Clearbridge International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Clearbridge International.
Diversification Opportunities for Franklin Small and Clearbridge International
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Clearbridge is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Clearbridge International Grow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge International and Franklin Small 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 Small Cap are associated (or correlated) with Clearbridge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge International has no effect on the direction of Franklin Small i.e., Franklin Small and Clearbridge International go up and down completely randomly.
Pair Corralation between Franklin Small and Clearbridge International
Assuming the 90 days horizon Franklin Small Cap is expected to generate 1.45 times more return on investment than Clearbridge International. However, Franklin Small is 1.45 times more volatile than Clearbridge International Growth. It trades about 0.09 of its potential returns per unit of risk. Clearbridge International Growth is currently generating about 0.03 per unit of risk. If you would invest 5,766 in Franklin Small Cap on August 27, 2024 and sell it today you would earn a total of 1,180 from holding Franklin Small Cap or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Cap vs. Clearbridge International Grow
Performance |
| Timeline |
| Franklin Small Cap |
| Clearbridge International |
Franklin Small and Clearbridge International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Clearbridge International
The main advantage of trading using opposite Franklin Small and Clearbridge International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Clearbridge International 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 Clearbridge International will offset losses from the drop in Clearbridge International's long position.| Franklin Small vs. Franklin Rising Dividends | Franklin Small vs. Franklin Mutual Global | Franklin Small vs. Franklin Mutual Shares | Franklin Small vs. Franklin Growth 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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