Correlation Between Ford and Clearbridge Select
Can any of the company-specific risk be diversified away by investing in both Ford and Clearbridge Select 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 Ford and Clearbridge Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Clearbridge Select Fund, you can compare the effects of market volatilities on Ford and Clearbridge Select 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 Ford with a short position of Clearbridge Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Clearbridge Select.
Diversification Opportunities for Ford and Clearbridge Select
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Clearbridge is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Clearbridge Select Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Select and Ford 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 Ford Motor are associated (or correlated) with Clearbridge Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Select has no effect on the direction of Ford i.e., Ford and Clearbridge Select go up and down completely randomly.
Pair Corralation between Ford and Clearbridge Select
Taking into account the 90-day investment horizon Ford is expected to generate 4.31 times less return on investment than Clearbridge Select. In addition to that, Ford is 2.24 times more volatile than Clearbridge Select Fund. It trades about 0.01 of its total potential returns per unit of risk. Clearbridge Select Fund is currently generating about 0.09 per unit of volatility. If you would invest 3,727 in Clearbridge Select Fund on September 3, 2024 and sell it today you would earn a total of 1,928 from holding Clearbridge Select Fund or generate 51.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Clearbridge Select Fund
Performance |
| Timeline |
| Ford Motor |
| Clearbridge Select |
Ford and Clearbridge Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Clearbridge Select
The main advantage of trading using opposite Ford and Clearbridge Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Clearbridge Select 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 Select will offset losses from the drop in Clearbridge Select's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. ECD Automotive Design |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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