Correlation Between Ford and Clearbridge Value
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Clearbridge Value 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 Value Trust, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Clearbridge Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Clearbridge Value.
Diversification Opportunities for Ford and Clearbridge Value
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Clearbridge is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 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 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 Ford i.e., Ford and Clearbridge Value go up and down completely randomly.
Pair Corralation between Ford and Clearbridge Value
Taking into account the 90-day investment horizon Ford is expected to generate 1.86 times less return on investment than Clearbridge Value. In addition to that, Ford is 2.4 times more volatile than Clearbridge Value Trust. It trades about 0.01 of its total potential returns per unit of risk. Clearbridge Value Trust is currently generating about 0.05 per unit of volatility. If you would invest 10,886 in Clearbridge Value Trust on August 29, 2024 and sell it today you would earn a total of 2,773 from holding Clearbridge Value Trust or generate 25.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Clearbridge Value Trust
Performance |
| Timeline |
| Ford Motor |
| Clearbridge Value Trust |
Ford and Clearbridge Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Clearbridge Value
The main advantage of trading using opposite Ford and Clearbridge Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Clearbridge Value Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Clearbridge Value vs. Calamos Dynamic Convertible | Clearbridge Value vs. Putnam Convertible Incm Gwth | Clearbridge Value vs. Allianzgi Convertible Income | Clearbridge Value vs. Rationalpier 88 Convertible |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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