Correlation Between Western Asset and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Western Asset and Franklin Growth 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 Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Franklin Growth Opportunities, you can compare the effects of market volatilities on Western Asset and Franklin Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Franklin Growth.
Diversification Opportunities for Western Asset and Franklin Growth
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Franklin is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Franklin Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Oppo 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 High are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth Oppo has no effect on the direction of Western Asset i.e., Western Asset and Franklin Growth go up and down completely randomly.
Pair Corralation between Western Asset and Franklin Growth
Assuming the 90 days horizon Western Asset is expected to generate 2.43 times less return on investment than Franklin Growth. But when comparing it to its historical volatility, Western Asset High is 3.71 times less risky than Franklin Growth. It trades about 0.15 of its potential returns per unit of risk. Franklin Growth Opportunities is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,913 in Franklin Growth Opportunities on December 4, 2024 and sell it today you would earn a total of 1,791 from holding Franklin Growth Opportunities or generate 61.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Western Asset High vs. Franklin Growth Opportunities
Performance |
| Timeline |
| Western Asset High |
| Franklin Growth Oppo |
Western Asset and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Franklin Growth
The main advantage of trading using opposite Western Asset and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.| Western Asset vs. Schwab Health Care | Western Asset vs. Baron Health Care | Western Asset vs. Blackrock Health Sciences | Western Asset vs. Eaton Vance Worldwide |
| Franklin Growth vs. Goldman Sachs Technology | Franklin Growth vs. Pgim Jennison Technology | Franklin Growth vs. Towpath Technology | Franklin Growth vs. Dreyfus Technology Growth |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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