Correlation Between Franklin Small and Clearbridge International

Can any of the company-specific risk be diversified away by investing in both Franklin Small and Clearbridge International 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 Franklin Small and Clearbridge International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Small Cap and Clearbridge International Growth, you can compare the effects of market volatilities on Franklin Small and Clearbridge International 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 Franklin Small with a short position of Clearbridge International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Clearbridge International.

Diversification Opportunities for Franklin Small and Clearbridge International

-0.42

Correlation Coefficient

Franklin Small  Clearbridge International

Very good diversification

The 3 months correlation between Franklin and Clearbridge is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Clearbridge International Grow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge International and Franklin Small 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 Franklin Small Cap are associated (or correlated) with Clearbridge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge International has no effect on the direction of Franklin Small i.e., Franklin Small and Clearbridge International go up and down completely randomly.

Pair Corralation between Franklin Small and Clearbridge International

Assuming the 90 days horizon Franklin Small Cap is expected to generate 1.54 times more return on investment than Clearbridge International. However, Franklin Small is 1.54 times more volatile than Clearbridge International Growth. It trades about 0.05 of its potential returns per unit of risk. Clearbridge International Growth is currently generating about 0.0 per unit of risk. If you would invest  5,857  in Franklin Small Cap on September 21, 2024 and sell it today you would earn a total of  501.00  from holding Franklin Small Cap or generate 8.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Franklin Small Cap  vs.  Clearbridge International Grow

Franklin Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clearbridge International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clearbridge International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Franklin Small and Clearbridge International

The main advantage of trading using opposite Franklin Small and Clearbridge International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Clearbridge International 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 Clearbridge International will offset losses from the drop in Clearbridge International's long position.

The idea behind Franklin Small Cap and Clearbridge International Growth 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.