Correlation Between Western Asset and Franklin International
Can any of the company-specific risk be diversified away by investing in both Western Asset and Franklin International 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 Western Asset and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Adjustable and Franklin International Growth, you can compare the effects of market volatilities on Western Asset and Franklin International 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 Western Asset with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Franklin International.
Diversification Opportunities for Western Asset and Franklin International
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Franklin is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Adjustable and Franklin International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and Western Asset 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 Western Asset Adjustable are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Western Asset i.e., Western Asset and Franklin International go up and down completely randomly.
Pair Corralation between Western Asset and Franklin International
Assuming the 90 days horizon Western Asset is expected to generate 6.28 times less return on investment than Franklin International. But when comparing it to its historical volatility, Western Asset Adjustable is 15.11 times less risky than Franklin International. It trades about 0.22 of its potential returns per unit of risk. Franklin International Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,710 in Franklin International Growth on September 1, 2024 and sell it today you would earn a total of 24.00 from holding Franklin International Growth or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset Adjustable vs. Franklin International Growth
Performance |
| Timeline |
| Western Asset Adjustable |
| Franklin International |
Western Asset and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Franklin International
The main advantage of trading using opposite Western Asset and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Franklin International 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 International will offset losses from the drop in Franklin International's long position.| Western Asset vs. Short Term Fund A | Western Asset vs. Western Asset Intermediate Term | Western Asset vs. T Rowe Price | Western Asset vs. Aquagold International |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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