Correlation Between Clearbridge Aggressive and Franklin California
Can any of the company-specific risk be diversified away by investing in both Clearbridge Aggressive and Franklin California 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 Aggressive and Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge Aggressive Growth and Franklin California Tax Free, you can compare the effects of market volatilities on Clearbridge Aggressive and Franklin California 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 Aggressive with a short position of Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Aggressive and Franklin California.
Diversification Opportunities for Clearbridge Aggressive and Franklin California
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clearbridge and Franklin is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Aggressive Growth and Franklin California Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California Tax and Clearbridge Aggressive 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 Aggressive Growth are associated (or correlated) with Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California Tax has no effect on the direction of Clearbridge Aggressive i.e., Clearbridge Aggressive and Franklin California go up and down completely randomly.
Pair Corralation between Clearbridge Aggressive and Franklin California
Assuming the 90 days horizon Clearbridge Aggressive Growth is expected to generate 3.38 times more return on investment than Franklin California. However, Clearbridge Aggressive is 3.38 times more volatile than Franklin California Tax Free. It trades about 0.31 of its potential returns per unit of risk. Franklin California Tax Free is currently generating about 0.15 per unit of risk. If you would invest 14,671 in Clearbridge Aggressive Growth on September 1, 2024 and sell it today you would earn a total of 1,077 from holding Clearbridge Aggressive Growth or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Aggressive Growth vs. Franklin California Tax Free
Performance |
| Timeline |
| Clearbridge Aggressive |
| Franklin California Tax |
Clearbridge Aggressive and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Aggressive and Franklin California
The main advantage of trading using opposite Clearbridge Aggressive and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Aggressive position performs unexpectedly, Franklin California 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 California will offset losses from the drop in Franklin California's long position.The idea behind Clearbridge Aggressive Growth and Franklin California Tax Free 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 California vs. Franklin Mutual Beacon | Franklin California vs. Templeton Developing Markets | Franklin California vs. Franklin Mutual Global | Franklin California 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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