Correlation Between Franklin Mutual and Clearbridge Large
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Clearbridge Large 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 Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual European and Clearbridge Large Cap, you can compare the effects of market volatilities on Franklin Mutual and Clearbridge Large 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 Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Clearbridge Large.
Diversification Opportunities for Franklin Mutual and Clearbridge Large
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and Clearbridge is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual European and Clearbridge Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Large Cap 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 European are associated (or correlated) with Clearbridge Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Large Cap has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Clearbridge Large go up and down completely randomly.
Pair Corralation between Franklin Mutual and Clearbridge Large
Assuming the 90 days horizon Franklin Mutual European is expected to under-perform the Clearbridge Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Mutual European is 1.19 times less risky than Clearbridge Large. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Clearbridge Large Cap is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 7,701 in Clearbridge Large Cap on August 26, 2024 and sell it today you would earn a total of 193.00 from holding Clearbridge Large Cap or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual European vs. Clearbridge Large Cap
Performance |
| Timeline |
| Franklin Mutual European |
| Clearbridge Large Cap |
Franklin Mutual and Clearbridge Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Clearbridge Large
The main advantage of trading using opposite Franklin Mutual and Clearbridge Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Clearbridge Large 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 Large will offset losses from the drop in Clearbridge Large's long position.| Franklin Mutual vs. Franklin Mutual Beacon | Franklin Mutual vs. Templeton Developing Markets | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Mutual Global |
| Clearbridge Large vs. Franklin Mutual Beacon | Clearbridge Large vs. Templeton Developing Markets | Clearbridge Large vs. Franklin Mutual Global | Clearbridge Large vs. Franklin Mutual 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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