Correlation Between Western Asset and Franklin Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Western Asset and Franklin Pennsylvania 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 Pennsylvania 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 Pennsylvania Tax Free, you can compare the effects of market volatilities on Western Asset and Franklin Pennsylvania 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 Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Franklin Pennsylvania.
Diversification Opportunities for Western Asset and Franklin Pennsylvania
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Franklin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Total and Franklin Pennsylvania Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Pennsylvania 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 Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Pennsylvania has no effect on the direction of Western Asset i.e., Western Asset and Franklin Pennsylvania go up and down completely randomly.
Pair Corralation between Western Asset and Franklin Pennsylvania
Assuming the 90 days horizon Western Asset is expected to generate 2.2 times less return on investment than Franklin Pennsylvania. But when comparing it to its historical volatility, Western Asset Total is 1.72 times less risky than Franklin Pennsylvania. It trades about 0.18 of its potential returns per unit of risk. Franklin Pennsylvania Tax Free is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 881.00 in Franklin Pennsylvania Tax Free on August 30, 2024 and sell it today you would earn a total of 15.00 from holding Franklin Pennsylvania Tax Free or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Total vs. Franklin Pennsylvania Tax Free
Performance |
| Timeline |
| Western Asset Total |
| Franklin Pennsylvania |
Western Asset and Franklin Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Franklin Pennsylvania
The main advantage of trading using opposite Western Asset and Franklin Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Franklin Pennsylvania 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 Pennsylvania will offset losses from the drop in Franklin Pennsylvania's long position.| Western Asset vs. Boston Partners Small | Western Asset vs. Ultramid Cap Profund Ultramid Cap | Western Asset vs. Great West Loomis Sayles | Western Asset vs. American Century Etf |
| Franklin Pennsylvania vs. Goldman Sachs Inflation | Franklin Pennsylvania vs. Ab Bond Inflation | Franklin Pennsylvania vs. Ab Bond Inflation | Franklin Pennsylvania vs. American Funds Inflation |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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