Correlation Between Dow Jones and Clearbridge Dividend
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Clearbridge Dividend 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 Dow Jones and Clearbridge Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Clearbridge Dividend Strategy, you can compare the effects of market volatilities on Dow Jones and Clearbridge Dividend 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 Dow Jones with a short position of Clearbridge Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Clearbridge Dividend.
Diversification Opportunities for Dow Jones and Clearbridge Dividend
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Clearbridge is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Clearbridge Dividend Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Dividend and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Clearbridge Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Dividend has no effect on the direction of Dow Jones i.e., Dow Jones and Clearbridge Dividend go up and down completely randomly.
Pair Corralation between Dow Jones and Clearbridge Dividend
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.29 times more return on investment than Clearbridge Dividend. However, Dow Jones is 1.29 times more volatile than Clearbridge Dividend Strategy. It trades about 0.29 of its potential returns per unit of risk. Clearbridge Dividend Strategy is currently generating about 0.21 per unit of risk. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Clearbridge Dividend Strategy
Performance |
| Timeline |
Dow Jones and Clearbridge Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Clearbridge Dividend Strategy
Pair trading matchups for Clearbridge Dividend
Pair Trading with Dow Jones and Clearbridge Dividend
The main advantage of trading using opposite Dow Jones and Clearbridge Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Clearbridge Dividend 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 Dividend will offset losses from the drop in Clearbridge Dividend's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Clearbridge Dividend vs. Clearbridge Appreciation Fund | Clearbridge Dividend vs. Clearbridge Aggressive Growth | Clearbridge Dividend vs. Clearbridge Mid Cap | Clearbridge Dividend vs. Clearbridge Large Cap |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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