Correlation Between Disney and Clearbridge Variable
Can any of the company-specific risk be diversified away by investing in both Disney and Clearbridge Variable 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 Disney and Clearbridge Variable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Clearbridge Variable Appreciation, you can compare the effects of market volatilities on Disney and Clearbridge Variable 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 Disney with a short position of Clearbridge Variable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Clearbridge Variable.
Diversification Opportunities for Disney and Clearbridge Variable
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Disney and Clearbridge is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Clearbridge Variable Appreciat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Variable and Disney 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 Walt Disney are associated (or correlated) with Clearbridge Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Variable has no effect on the direction of Disney i.e., Disney and Clearbridge Variable go up and down completely randomly.
Pair Corralation between Disney and Clearbridge Variable
Considering the 90-day investment horizon Walt Disney is expected to generate 2.26 times more return on investment than Clearbridge Variable. However, Disney is 2.26 times more volatile than Clearbridge Variable Appreciation. It trades about 0.45 of its potential returns per unit of risk. Clearbridge Variable Appreciation is currently generating about 0.22 per unit of risk. If you would invest 9,620 in Walt Disney on August 29, 2024 and sell it today you would earn a total of 1,925 from holding Walt Disney or generate 20.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Clearbridge Variable Appreciat
Performance |
| Timeline |
| Walt Disney |
| Clearbridge Variable |
Disney and Clearbridge Variable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Clearbridge Variable
The main advantage of trading using opposite Disney and Clearbridge Variable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Clearbridge Variable 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 Variable will offset losses from the drop in Clearbridge Variable's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| Clearbridge Variable vs. Deutsche Global Inflation | Clearbridge Variable vs. Ab Municipal Bond | Clearbridge Variable vs. Western Asset Inflation | Clearbridge Variable vs. Ab Bond Inflation |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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