Correlation Between Frost Credit and Clearbridge Energy
Can any of the company-specific risk be diversified away by investing in both Frost Credit and Clearbridge Energy 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 Frost Credit and Clearbridge Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frost Credit Fund and Clearbridge Energy Mlp, you can compare the effects of market volatilities on Frost Credit and Clearbridge Energy 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 Frost Credit with a short position of Clearbridge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frost Credit and Clearbridge Energy.
Diversification Opportunities for Frost Credit and Clearbridge Energy
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Frost and Clearbridge is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Frost Credit Fund and Clearbridge Energy Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Energy Mlp and Frost Credit 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 Frost Credit Fund are associated (or correlated) with Clearbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Energy Mlp has no effect on the direction of Frost Credit i.e., Frost Credit and Clearbridge Energy go up and down completely randomly.
Pair Corralation between Frost Credit and Clearbridge Energy
Assuming the 90 days horizon Frost Credit is expected to generate 3.02 times less return on investment than Clearbridge Energy. But when comparing it to its historical volatility, Frost Credit Fund is 7.37 times less risky than Clearbridge Energy. It trades about 0.2 of its potential returns per unit of risk. Clearbridge Energy Mlp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,412 in Clearbridge Energy Mlp on September 3, 2024 and sell it today you would earn a total of 2,170 from holding Clearbridge Energy Mlp or generate 63.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frost Credit Fund vs. Clearbridge Energy Mlp
Performance |
| Timeline |
| Frost Credit |
| Clearbridge Energy Mlp |
Frost Credit and Clearbridge Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frost Credit and Clearbridge Energy
The main advantage of trading using opposite Frost Credit and Clearbridge Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frost Credit position performs unexpectedly, Clearbridge Energy 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 Energy will offset losses from the drop in Clearbridge Energy's long position.| Frost Credit vs. Clearbridge Energy Mlp | Frost Credit vs. Oil Gas Ultrasector | Frost Credit vs. Invesco Energy Fund | Frost Credit vs. Franklin Natural Resources |
| Clearbridge Energy vs. Energy Basic Materials | Clearbridge Energy vs. Tortoise Energy Independence | Clearbridge Energy vs. Fidelity Advisor Energy | Clearbridge Energy vs. Dreyfus Natural Resources |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |