Correlation Between Franklin Mutual and Clearbridge International
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Clearbridge International 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 International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Global and Clearbridge International Growth, you can compare the effects of market volatilities on Franklin Mutual and Clearbridge International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Clearbridge International.
Diversification Opportunities for Franklin Mutual and Clearbridge International
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Clearbridge is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Clearbridge International Grow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge International 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 Global are associated (or correlated) with Clearbridge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge International has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Clearbridge International go up and down completely randomly.
Pair Corralation between Franklin Mutual and Clearbridge International
Assuming the 90 days horizon Franklin Mutual Global is expected to generate 0.77 times more return on investment than Clearbridge International. However, Franklin Mutual Global is 1.3 times less risky than Clearbridge International. It trades about 0.05 of its potential returns per unit of risk. Clearbridge International Growth is currently generating about 0.03 per unit of risk. If you would invest 2,988 in Franklin Mutual Global on August 27, 2024 and sell it today you would earn a total of 187.00 from holding Franklin Mutual Global or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Global vs. Clearbridge International Grow
Performance |
| Timeline |
| Franklin Mutual Global |
| Clearbridge International |
Franklin Mutual and Clearbridge International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Clearbridge International
The main advantage of trading using opposite Franklin Mutual and Clearbridge International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Clearbridge International 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 International will offset losses from the drop in Clearbridge International's long position.| Franklin Mutual vs. Lord Abbett Small | Franklin Mutual vs. Fidelity Small Cap | Franklin Mutual vs. Amg River Road | Franklin Mutual vs. American Century Etf |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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