Correlation Between Clearbridge Large and Franklin New
Can any of the company-specific risk be diversified away by investing in both Clearbridge Large and Franklin New 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 Large and Franklin New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge Large Cap and Franklin New York, you can compare the effects of market volatilities on Clearbridge Large and Franklin New 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 Large with a short position of Franklin New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Large and Franklin New.
Diversification Opportunities for Clearbridge Large and Franklin New
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Clearbridge and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Large Cap and Franklin New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New York and Clearbridge Large 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 Large Cap are associated (or correlated) with Franklin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New York has no effect on the direction of Clearbridge Large i.e., Clearbridge Large and Franklin New go up and down completely randomly.
Pair Corralation between Clearbridge Large and Franklin New
If you would invest (100.00) in Franklin New York on August 30, 2024 and sell it today you would earn a total of 100.00 from holding Franklin New York or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Clearbridge Large Cap vs. Franklin New York
Performance |
| Timeline |
| Clearbridge Large Cap |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Franklin New York |
Clearbridge Large and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Large and Franklin New
The main advantage of trading using opposite Clearbridge Large and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Large position performs unexpectedly, Franklin New 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 New will offset losses from the drop in Franklin New's long position.The idea behind Clearbridge Large Cap and Franklin New York 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.
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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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