Correlation Between Clearbridge Appreciation and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Clearbridge Appreciation and Franklin Templeton 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 Clearbridge Appreciation and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge Appreciation Fund and Franklin Templeton Smacs, you can compare the effects of market volatilities on Clearbridge Appreciation and Franklin Templeton 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 Clearbridge Appreciation with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Appreciation and Franklin Templeton.
Diversification Opportunities for Clearbridge Appreciation and Franklin Templeton
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clearbridge and Franklin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Appreciation Fund and Franklin Templeton Smacs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton Smacs and Clearbridge Appreciation 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 Clearbridge Appreciation Fund are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton Smacs has no effect on the direction of Clearbridge Appreciation i.e., Clearbridge Appreciation and Franklin Templeton go up and down completely randomly.
Pair Corralation between Clearbridge Appreciation and Franklin Templeton
Assuming the 90 days horizon Clearbridge Appreciation Fund is expected to generate 0.71 times more return on investment than Franklin Templeton. However, Clearbridge Appreciation Fund is 1.41 times less risky than Franklin Templeton. It trades about 0.12 of its potential returns per unit of risk. Franklin Templeton Smacs is currently generating about 0.08 per unit of risk. If you would invest 2,329 in Clearbridge Appreciation Fund on July 3, 2024 and sell it today you would earn a total of 1,320 from holding Clearbridge Appreciation Fund or generate 56.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Clearbridge Appreciation Fund vs. Franklin Templeton Smacs
Performance |
Timeline |
Clearbridge Appreciation |
Franklin Templeton Smacs |
Clearbridge Appreciation and Franklin Templeton Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Clearbridge Appreciation and Franklin Templeton
The main advantage of trading using opposite Clearbridge Appreciation and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Appreciation position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.The idea behind Clearbridge Appreciation Fund and Franklin Templeton Smacs pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Franklin Templeton vs. Templeton Foreign Fund | Franklin Templeton vs. Franklin Mutual Global | Franklin Templeton vs. Franklin Real Estate | Franklin Templeton vs. Aquagold International |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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