Correlation Between Western Asset and Franklin Balance
Can any of the company-specific risk be diversified away by investing in both Western Asset and Franklin Balance 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 Balance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Intermediate Term and Franklin Balance Sheet, you can compare the effects of market volatilities on Western Asset and Franklin Balance 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 Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Franklin Balance.
Diversification Opportunities for Western Asset and Franklin Balance
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Franklin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Intermediate Ter and Franklin Balance Sheet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Balance Sheet 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 Intermediate Term are associated (or correlated) with Franklin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Balance Sheet has no effect on the direction of Western Asset i.e., Western Asset and Franklin Balance go up and down completely randomly.
Pair Corralation between Western Asset and Franklin Balance
Assuming the 90 days horizon Western Asset Intermediate Term is expected to generate 0.31 times more return on investment than Franklin Balance. However, Western Asset Intermediate Term is 3.28 times less risky than Franklin Balance. It trades about 0.16 of its potential returns per unit of risk. Franklin Balance Sheet is currently generating about -0.1 per unit of risk. If you would invest 602.00 in Western Asset Intermediate Term on November 27, 2024 and sell it today you would earn a total of 4.00 from holding Western Asset Intermediate Term or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Intermediate Ter vs. Franklin Balance Sheet
Performance |
| Timeline |
| Western Asset Interm |
| Franklin Balance Sheet |
Western Asset and Franklin Balance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Franklin Balance
The main advantage of trading using opposite Western Asset and Franklin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Franklin Balance 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 Balance will offset losses from the drop in Franklin Balance's long position.| Western Asset vs. American Mutual Fund | Western Asset vs. Tiaa Cref Large Cap Growth | Western Asset vs. Neiman Large Cap | Western Asset vs. M Large Cap |
| Franklin Balance vs. Calvert Large Cap | Franklin Balance vs. Guidemark Large Cap | Franklin Balance vs. Dodge Cox Stock | Franklin Balance vs. M Large Cap |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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