Correlation Between Clearbridge Small and Franklin Rising
Can any of the company-specific risk be diversified away by investing in both Clearbridge Small and Franklin Rising 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 Small and Franklin Rising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge Small Cap and Franklin Rising Dividends, you can compare the effects of market volatilities on Clearbridge Small and Franklin Rising 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 Small with a short position of Franklin Rising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Small and Franklin Rising.
Diversification Opportunities for Clearbridge Small and Franklin Rising
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Clearbridge and Franklin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Small Cap and Franklin Rising Dividends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Rising Dividends and Clearbridge Small 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 Small Cap are associated (or correlated) with Franklin Rising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Rising Dividends has no effect on the direction of Clearbridge Small i.e., Clearbridge Small and Franklin Rising go up and down completely randomly.
Pair Corralation between Clearbridge Small and Franklin Rising
Assuming the 90 days horizon Clearbridge Small Cap is expected to generate 2.43 times more return on investment than Franklin Rising. However, Clearbridge Small is 2.43 times more volatile than Franklin Rising Dividends. It trades about 0.35 of its potential returns per unit of risk. Franklin Rising Dividends is currently generating about 0.31 per unit of risk. If you would invest 3,598 in Clearbridge Small Cap on September 1, 2024 and sell it today you would earn a total of 428.00 from holding Clearbridge Small Cap or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Clearbridge Small Cap vs. Franklin Rising Dividends
Performance |
| Timeline |
| Clearbridge Small Cap |
| Franklin Rising Dividends |
Clearbridge Small and Franklin Rising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Small and Franklin Rising
The main advantage of trading using opposite Clearbridge Small and Franklin Rising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Small position performs unexpectedly, Franklin Rising 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 Rising will offset losses from the drop in Franklin Rising's long position.| Clearbridge Small vs. Pimco Funds | Clearbridge Small vs. Ashmore Emerging Markets | Clearbridge Small vs. John Hancock Money | Clearbridge Small vs. Transamerica Funds |
| Franklin Rising vs. Franklin Mutual Global | Franklin Rising vs. Franklin Growth Fund | Franklin Rising vs. Franklin Dynatech Fund | Franklin Rising vs. Franklin Strategic Income |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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