Correlation Between Clearbridge International and Franklin Small-mid
Can any of the company-specific risk be diversified away by investing in both Clearbridge International and Franklin Small-mid 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 Clearbridge International and Franklin Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge International Growth and Franklin Small Mid Cap, you can compare the effects of market volatilities on Clearbridge International and Franklin Small-mid 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 Clearbridge International with a short position of Franklin Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge International and Franklin Small-mid.
Diversification Opportunities for Clearbridge International and Franklin Small-mid
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Clearbridge and Franklin is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge International Grow and Franklin Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Mid and Clearbridge International 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 Clearbridge International Growth are associated (or correlated) with Franklin Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Small Mid has no effect on the direction of Clearbridge International i.e., Clearbridge International and Franklin Small-mid go up and down completely randomly.
Pair Corralation between Clearbridge International and Franklin Small-mid
Assuming the 90 days horizon Clearbridge International is expected to generate 6.61 times less return on investment than Franklin Small-mid. But when comparing it to its historical volatility, Clearbridge International Growth is 1.49 times less risky than Franklin Small-mid. It trades about 0.09 of its potential returns per unit of risk. Franklin Small Mid Cap is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 4,515 in Franklin Small Mid Cap on September 1, 2024 and sell it today you would earn a total of 435.00 from holding Franklin Small Mid Cap or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Clearbridge International Grow vs. Franklin Small Mid Cap
Performance |
| Timeline |
| Clearbridge International |
| Franklin Small Mid |
Clearbridge International and Franklin Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge International and Franklin Small-mid
The main advantage of trading using opposite Clearbridge International and Franklin Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge International position performs unexpectedly, Franklin Small-mid 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 Franklin Small-mid will offset losses from the drop in Franklin Small-mid's long position.The idea behind Clearbridge International Growth and Franklin Small Mid Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Franklin Small-mid vs. Franklin Mutual Beacon | Franklin Small-mid vs. Templeton Developing Markets | Franklin Small-mid vs. Franklin Mutual Global | Franklin Small-mid vs. Franklin Mutual Global |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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