Correlation Between High Yield and Clearbridge Value
Can any of the company-specific risk be diversified away by investing in both High Yield and Clearbridge Value 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 High Yield and Clearbridge Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and Clearbridge Value Trust, you can compare the effects of market volatilities on High Yield and Clearbridge Value 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 High Yield with a short position of Clearbridge Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Clearbridge Value.
Diversification Opportunities for High Yield and Clearbridge Value
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High and Clearbridge is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Clearbridge Value Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Value Trust and High Yield 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 High Yield Municipal Fund are associated (or correlated) with Clearbridge Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Value Trust has no effect on the direction of High Yield i.e., High Yield and Clearbridge Value go up and down completely randomly.
Pair Corralation between High Yield and Clearbridge Value
Assuming the 90 days horizon High Yield Municipal Fund is expected to under-perform the Clearbridge Value. But the mutual fund apears to be less risky and, when comparing its historical volatility, High Yield Municipal Fund is 2.84 times less risky than Clearbridge Value. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Clearbridge Value Trust is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 12,600 in Clearbridge Value Trust on November 4, 2024 and sell it today you would earn a total of 314.00 from holding Clearbridge Value Trust or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Clearbridge Value Trust
Performance |
| Timeline |
| High Yield Municipal |
| Clearbridge Value Trust |
High Yield and Clearbridge Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and Clearbridge Value
The main advantage of trading using opposite High Yield and Clearbridge Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, Clearbridge Value 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 Value will offset losses from the drop in Clearbridge Value's long position.| High Yield vs. High Yield Fund Investor | High Yield vs. Intermediate Term Tax Free Bond | High Yield vs. California High Yield Municipal | High Yield vs. T Rowe Price |
| Clearbridge Value vs. Siit Ultra Short | Clearbridge Value vs. Blackrock Global Longshort | Clearbridge Value vs. Aqr Sustainable Long Short | Clearbridge Value vs. Alpine Ultra Short |
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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