Correlation Between Emerging Markets and Clearbridge Small
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Clearbridge Small 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 Emerging Markets and Clearbridge Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Fund and Clearbridge Small Cap, you can compare the effects of market volatilities on Emerging Markets and Clearbridge Small 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 Emerging Markets with a short position of Clearbridge Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Clearbridge Small.
Diversification Opportunities for Emerging Markets and Clearbridge Small
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Emerging and Clearbridge is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Fund and Clearbridge Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Small Cap and Emerging Markets 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 Emerging Markets Fund are associated (or correlated) with Clearbridge Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Small Cap has no effect on the direction of Emerging Markets i.e., Emerging Markets and Clearbridge Small go up and down completely randomly.
Pair Corralation between Emerging Markets and Clearbridge Small
Assuming the 90 days horizon Emerging Markets Fund is expected to under-perform the Clearbridge Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Emerging Markets Fund is 1.79 times less risky than Clearbridge Small. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Clearbridge Small Cap is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,625 in Clearbridge Small Cap on August 24, 2024 and sell it today you would earn a total of 237.00 from holding Clearbridge Small Cap or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Emerging Markets Fund vs. Clearbridge Small Cap
Performance |
| Timeline |
| Emerging Markets |
| Clearbridge Small Cap |
Emerging Markets and Clearbridge Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Clearbridge Small
The main advantage of trading using opposite Emerging Markets and Clearbridge Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Clearbridge Small 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 Small will offset losses from the drop in Clearbridge Small's long position.| Emerging Markets vs. Janus Triton Fund | Emerging Markets vs. Blackrock International Index | Emerging Markets vs. Real Estate Securities | Emerging Markets vs. State Street Equity |
| Clearbridge Small vs. The Hartford Equity | Clearbridge Small vs. Ab Select Equity | Clearbridge Small vs. Federated Equity Income | Clearbridge Small vs. The Hartford Equity |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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