Correlation Between Clearbridge Mid and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Clearbridge Mid 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 Mid 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 Mid Cap and Franklin Mutual Beacon, you can compare the effects of market volatilities on Clearbridge Mid 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 Mid with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Mid and Franklin Mutual.
Diversification Opportunities for Clearbridge Mid and Franklin Mutual
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 Mid 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 Mid 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 Mid 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 Mid i.e., Clearbridge Mid and Franklin Mutual go up and down completely randomly.
Pair Corralation between Clearbridge Mid and Franklin Mutual
Assuming the 90 days horizon Clearbridge Mid Cap is expected to generate 1.71 times more return on investment than Franklin Mutual. However, Clearbridge Mid is 1.71 times more volatile than Franklin Mutual Beacon. It trades about 0.45 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.36 per unit of risk. If you would invest 3,531 in Clearbridge Mid Cap on September 1, 2024 and sell it today you would earn a total of 367.00 from holding Clearbridge Mid Cap or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Clearbridge Mid Cap vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Clearbridge Mid Cap |
| Franklin Mutual Beacon |
Clearbridge Mid and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Mid and Franklin Mutual
The main advantage of trading using opposite Clearbridge Mid and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Mid 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 Mid vs. Franklin Mutual Beacon | Clearbridge Mid vs. Templeton Developing Markets | Clearbridge Mid vs. Franklin Mutual Global | Clearbridge Mid vs. Franklin Mutual Global |
| Franklin Mutual vs. Aqr Risk Balanced Modities | Franklin Mutual vs. Strategic Allocation Aggressive | Franklin Mutual vs. Western Asset High | Franklin Mutual vs. Needham Aggressive Growth |
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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