Correlation Between Western Asset and Franklin New
Can any of the company-specific risk be diversified away by investing in both Western Asset and Franklin New 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 New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Franklin New Jersey, you can compare the effects of market volatilities on Western Asset and Franklin New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Franklin New.
Diversification Opportunities for Western Asset and Franklin New
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Franklin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Franklin New Jersey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New Jersey 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 Municipal are associated (or correlated) with Franklin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New Jersey has no effect on the direction of Western Asset i.e., Western Asset and Franklin New go up and down completely randomly.
Pair Corralation between Western Asset and Franklin New
Assuming the 90 days horizon Western Asset is expected to generate 1.54 times less return on investment than Franklin New. In addition to that, Western Asset is 1.21 times more volatile than Franklin New Jersey. It trades about 0.11 of its total potential returns per unit of risk. Franklin New Jersey is currently generating about 0.2 per unit of volatility. If you would invest 1,033 in Franklin New Jersey on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Franklin New Jersey or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset Municipal vs. Franklin New Jersey
Performance |
| Timeline |
| Western Asset Municipal |
| Franklin New Jersey |
Western Asset and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Franklin New
The main advantage of trading using opposite Western Asset and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Franklin New 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 New will offset losses from the drop in Franklin New's long position.| Western Asset vs. Lord Abbett Diversified | Western Asset vs. Blackrock Conservative Prprdptfinstttnl | Western Asset vs. Pioneer Diversified High | Western Asset vs. Aqr Diversified Arbitrage |
| Franklin New vs. Franklin Mutual Beacon | Franklin New vs. Templeton Developing Markets | Franklin New vs. Franklin Mutual Global | Franklin New 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |