Correlation Between Franklin Mutual and Clearbridge Aggressive
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Clearbridge Aggressive 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 Franklin Mutual and Clearbridge Aggressive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Beacon and Clearbridge Aggressive Growth, you can compare the effects of market volatilities on Franklin Mutual and Clearbridge Aggressive 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 Franklin Mutual with a short position of Clearbridge Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Clearbridge Aggressive.
Diversification Opportunities for Franklin Mutual and Clearbridge Aggressive
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Clearbridge is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon and Clearbridge Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Aggressive and Franklin Mutual 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 Franklin Mutual Beacon are associated (or correlated) with Clearbridge Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Aggressive has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Clearbridge Aggressive go up and down completely randomly.
Pair Corralation between Franklin Mutual and Clearbridge Aggressive
Assuming the 90 days horizon Franklin Mutual is expected to generate 1.61 times less return on investment than Clearbridge Aggressive. But when comparing it to its historical volatility, Franklin Mutual Beacon is 1.89 times less risky than Clearbridge Aggressive. It trades about 0.36 of its potential returns per unit of risk. Clearbridge Aggressive Growth is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 14,671 in Clearbridge Aggressive Growth on September 1, 2024 and sell it today you would earn a total of 1,077 from holding Clearbridge Aggressive Growth or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Beacon vs. Clearbridge Aggressive Growth
Performance |
| Timeline |
| Franklin Mutual Beacon |
| Clearbridge Aggressive |
Franklin Mutual and Clearbridge Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Clearbridge Aggressive
The main advantage of trading using opposite Franklin Mutual and Clearbridge Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Clearbridge Aggressive 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 Clearbridge Aggressive will offset losses from the drop in Clearbridge Aggressive's long position.| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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