Correlation Between Clearbridge Large and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Clearbridge Large and Franklin Lifesmart 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 Lifesmart 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 Lifesmart 2055, you can compare the effects of market volatilities on Clearbridge Large and Franklin Lifesmart 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 Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Large and Franklin Lifesmart.
Diversification Opportunities for Clearbridge Large and Franklin Lifesmart
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clearbridge and Franklin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Large Cap and Franklin Lifesmart 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2055 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 Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2055 has no effect on the direction of Clearbridge Large i.e., Clearbridge Large and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Clearbridge Large and Franklin Lifesmart
Assuming the 90 days horizon Clearbridge Large Cap is expected to generate 1.45 times more return on investment than Franklin Lifesmart. However, Clearbridge Large is 1.45 times more volatile than Franklin Lifesmart 2055. It trades about 0.31 of its potential returns per unit of risk. Franklin Lifesmart 2055 is currently generating about 0.08 per unit of risk. If you would invest 4,399 in Clearbridge Large Cap on August 30, 2024 and sell it today you would earn a total of 285.00 from holding Clearbridge Large Cap or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Large Cap vs. Franklin Lifesmart 2055
Performance |
| Timeline |
| Clearbridge Large Cap |
| Franklin Lifesmart 2055 |
Clearbridge Large and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Large and Franklin Lifesmart
The main advantage of trading using opposite Clearbridge Large and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Large position performs unexpectedly, Franklin Lifesmart 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 Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.| Clearbridge Large vs. Lord Abbett Health | Clearbridge Large vs. Highland Longshort Healthcare | Clearbridge Large vs. Allianzgi Health Sciences | Clearbridge Large vs. Fidelity Advisor Health |
| Franklin Lifesmart vs. Huber Capital Diversified | Franklin Lifesmart vs. Sentinel Small Pany | Franklin Lifesmart vs. Tiaa Cref Small Cap Blend | Franklin Lifesmart vs. Massmutual Premier Diversified |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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