Correlation Between Clearbridge Small and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Clearbridge Small 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 Small 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 Small Cap and Franklin Mutual Beacon, you can compare the effects of market volatilities on Clearbridge Small 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 Small with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Small and Franklin Mutual.
Diversification Opportunities for Clearbridge Small and Franklin Mutual
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Clearbridge and Franklin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Small Cap and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon 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 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 Beacon has no effect on the direction of Clearbridge Small i.e., Clearbridge Small and Franklin Mutual go up and down completely randomly.
Pair Corralation between Clearbridge Small and Franklin Mutual
Assuming the 90 days horizon Clearbridge Small is expected to generate 1.45 times less return on investment than Franklin Mutual. In addition to that, Clearbridge Small is 1.66 times more volatile than Franklin Mutual Beacon. It trades about 0.01 of its total potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.02 per unit of volatility. If you would invest 1,507 in Franklin Mutual Beacon on October 19, 2024 and sell it today you would earn a total of 113.00 from holding Franklin Mutual Beacon or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Small Cap vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Clearbridge Small Cap |
| Franklin Mutual Beacon |
Clearbridge Small and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Small and Franklin Mutual
The main advantage of trading using opposite Clearbridge Small and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Small 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.| Clearbridge Small vs. Georgia Tax Free Bond | Clearbridge Small vs. Dws Government Money | Clearbridge Small vs. Multisector Bond Sma | Clearbridge Small vs. Doubleline Total Return |
| Franklin Mutual vs. Greenspring Fund Retail | Franklin Mutual vs. Us Vector Equity | Franklin Mutual vs. Qs Global Equity | Franklin Mutual vs. Dws Equity Sector |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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