Correlation Between Clearbridge International and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Clearbridge International and Franklin Mutual 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 Mutual 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 Mutual Shares, you can compare the effects of market volatilities on Clearbridge International and Franklin Mutual 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 Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge International and Franklin Mutual.
Diversification Opportunities for Clearbridge International and Franklin Mutual
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Clearbridge and Franklin is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge International Grow and Franklin Mutual Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Shares 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 Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Shares has no effect on the direction of Clearbridge International i.e., Clearbridge International and Franklin Mutual go up and down completely randomly.
Pair Corralation between Clearbridge International and Franklin Mutual
Assuming the 90 days horizon Clearbridge International Growth is expected to under-perform the Franklin Mutual. But the mutual fund apears to be less risky and, when comparing its historical volatility, Clearbridge International Growth is 1.22 times less risky than Franklin Mutual. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Franklin Mutual Shares is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 2,720 in Franklin Mutual Shares on August 31, 2024 and sell it today you would earn a total of 159.00 from holding Franklin Mutual Shares or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge International Grow vs. Franklin Mutual Shares
Performance |
| Timeline |
| Clearbridge International |
| Franklin Mutual Shares |
Clearbridge International and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge International and Franklin Mutual
The main advantage of trading using opposite Clearbridge International and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge International position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.The idea behind Clearbridge International Growth and Franklin Mutual Shares 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 Mutual vs. Templeton Growth Fund | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Income Fund | Franklin Mutual vs. Franklin Rising Dividends |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |