Correlation Between Legg Mason and Franklin
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Franklin 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 Legg Mason and Franklin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Partners and Franklin Government Money, you can compare the effects of market volatilities on Legg Mason and Franklin 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 Legg Mason with a short position of Franklin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Franklin.
Diversification Opportunities for Legg Mason and Franklin
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and Franklin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money and Legg Mason 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 Legg Mason Partners are associated (or correlated) with Franklin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of Legg Mason i.e., Legg Mason and Franklin go up and down completely randomly.
Pair Corralation between Legg Mason and Franklin
Assuming the 90 days horizon If you would invest 95.00 in Franklin Government Money on August 25, 2024 and sell it today you would earn a total of 5.00 from holding Franklin Government Money or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Franklin Government Money
Performance |
| Timeline |
| Legg Mason Partners |
| Franklin Government Money |
Legg Mason and Franklin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Franklin
The main advantage of trading using opposite Legg Mason and Franklin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Franklin 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 will offset losses from the drop in Franklin's long position.| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
| Franklin vs. Rbb Fund Trust | Franklin vs. Barings Global Floating | Franklin vs. Kinetics Global Fund | Franklin vs. Morgan Stanley Global |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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