Correlation Between Western Asset and Franklin Federal

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Western Asset and Franklin Federal 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 Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Managed and Franklin Federal Tax Free, you can compare the effects of market volatilities on Western Asset and Franklin Federal 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 Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Franklin Federal.

Diversification Opportunities for Western Asset and Franklin Federal

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Western and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WESTERN ASSET MANAGED and FRANKLIN FEDERAL TAX-FREE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Tax-free 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 Managed are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax-free has no effect on the direction of Western Asset i.e., Western Asset and Franklin Federal go up and down completely randomly.

Pair Corralation between Western Asset and Franklin Federal

If you would invest  1,079  in Franklin Federal Tax Free on December 29, 2023 and sell it today you would earn a total of  4.00  from holding Franklin Federal Tax Free or generate 0.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

WESTERN ASSET MANAGED  vs.  FRANKLIN FEDERAL TAX-FREE

 Performance 
       Timeline  
Western Asset Managed 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Federal Tax Free are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Franklin Federal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Asset and Franklin Federal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Western Asset and Franklin Federal

The main advantage of trading using opposite Western Asset and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.
The idea behind Western Asset Managed and Franklin Federal Tax Free 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.
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

Other Complementary Tools

Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios