Correlation Between Franklin Mutual and Clearbridge Appreciation
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Clearbridge Appreciation 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 Appreciation 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 Appreciation Fund, you can compare the effects of market volatilities on Franklin Mutual and Clearbridge Appreciation 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 Appreciation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Clearbridge Appreciation.
Diversification Opportunities for Franklin Mutual and Clearbridge Appreciation
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Clearbridge is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon and Clearbridge Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Appreciation 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 Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Appreciation has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Clearbridge Appreciation go up and down completely randomly.
Pair Corralation between Franklin Mutual and Clearbridge Appreciation
Assuming the 90 days horizon Franklin Mutual is expected to generate 1.88 times less return on investment than Clearbridge Appreciation. But when comparing it to its historical volatility, Franklin Mutual Beacon is 1.03 times less risky than Clearbridge Appreciation. It trades about 0.06 of its potential returns per unit of risk. Clearbridge Appreciation Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,366 in Clearbridge Appreciation Fund on September 3, 2024 and sell it today you would earn a total of 484.00 from holding Clearbridge Appreciation Fund or generate 14.38% 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 Appreciation Fund
Performance |
| Timeline |
| Franklin Mutual Beacon |
| Clearbridge Appreciation |
Franklin Mutual and Clearbridge Appreciation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Clearbridge Appreciation
The main advantage of trading using opposite Franklin Mutual and Clearbridge Appreciation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Clearbridge Appreciation 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 Appreciation will offset losses from the drop in Clearbridge Appreciation's long position.| Franklin Mutual vs. Inverse Government Long | Franklin Mutual vs. Aig Government Money | Franklin Mutual vs. Dunham Porategovernment Bond | Franklin Mutual vs. Us Government Securities |
| Clearbridge Appreciation vs. Ultra Short Fixed Income | Clearbridge Appreciation vs. Artisan Select Equity | Clearbridge Appreciation vs. Small Cap Equity | Clearbridge Appreciation vs. Sarofim Equity |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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