Correlation Between Western Asset and Franklin Minnesota
Can any of the company-specific risk be diversified away by investing in both Western Asset and Franklin Minnesota 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 Western Asset and Franklin Minnesota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Total and Franklin Minnesota Tax Free, you can compare the effects of market volatilities on Western Asset and Franklin Minnesota 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 Western Asset with a short position of Franklin Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Franklin Minnesota.
Diversification Opportunities for Western Asset and Franklin Minnesota
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Franklin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Total and Franklin Minnesota Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Minnesota Tax and Western Asset 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 Western Asset Total are associated (or correlated) with Franklin Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Minnesota Tax has no effect on the direction of Western Asset i.e., Western Asset and Franklin Minnesota go up and down completely randomly.
Pair Corralation between Western Asset and Franklin Minnesota
Assuming the 90 days horizon Western Asset is expected to generate 1.32 times less return on investment than Franklin Minnesota. But when comparing it to its historical volatility, Western Asset Total is 1.86 times less risky than Franklin Minnesota. It trades about 0.31 of its potential returns per unit of risk. Franklin Minnesota Tax Free is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,129 in Franklin Minnesota Tax Free on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Franklin Minnesota Tax Free or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset Total vs. Franklin Minnesota Tax Free
Performance |
| Timeline |
| Western Asset Total |
| Franklin Minnesota Tax |
Western Asset and Franklin Minnesota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Franklin Minnesota
The main advantage of trading using opposite Western Asset and Franklin Minnesota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Franklin Minnesota 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 Minnesota will offset losses from the drop in Franklin Minnesota's long position.| Western Asset vs. Pro Blend Moderate Term | Western Asset vs. Target Retirement 2040 | Western Asset vs. Franklin Lifesmart Retirement | Western Asset vs. Fidelity Managed Retirement |
| Franklin Minnesota vs. Franklin Mutual Beacon | Franklin Minnesota vs. Templeton Developing Markets | Franklin Minnesota vs. Franklin Mutual Global | Franklin Minnesota 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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