Correlation Between ClearBridge Sustainable and SPDR Kensho
Can any of the company-specific risk be diversified away by investing in both ClearBridge Sustainable and SPDR Kensho 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 ClearBridge Sustainable and SPDR Kensho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ClearBridge Sustainable Infrastructure and SPDR Kensho Intelligent, you can compare the effects of market volatilities on ClearBridge Sustainable and SPDR Kensho 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 ClearBridge Sustainable with a short position of SPDR Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearBridge Sustainable and SPDR Kensho.
Diversification Opportunities for ClearBridge Sustainable and SPDR Kensho
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ClearBridge and SPDR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ClearBridge Sustainable Infras and SPDR Kensho Intelligent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Intelligent and ClearBridge Sustainable 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 ClearBridge Sustainable Infrastructure are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Intelligent has no effect on the direction of ClearBridge Sustainable i.e., ClearBridge Sustainable and SPDR Kensho go up and down completely randomly.
Pair Corralation between ClearBridge Sustainable and SPDR Kensho
Given the investment horizon of 90 days ClearBridge Sustainable is expected to generate 1.46 times less return on investment than SPDR Kensho. But when comparing it to its historical volatility, ClearBridge Sustainable Infrastructure is 1.42 times less risky than SPDR Kensho. It trades about 0.0 of its potential returns per unit of risk. SPDR Kensho Intelligent is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,446 in SPDR Kensho Intelligent on November 19, 2024 and sell it today you would lose (32.00) from holding SPDR Kensho Intelligent or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ClearBridge Sustainable Infras vs. SPDR Kensho Intelligent
Performance |
| Timeline |
| ClearBridge Sustainable |
| SPDR Kensho Intelligent |
ClearBridge Sustainable and SPDR Kensho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ClearBridge Sustainable and SPDR Kensho
The main advantage of trading using opposite ClearBridge Sustainable and SPDR Kensho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearBridge Sustainable position performs unexpectedly, SPDR Kensho 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 SPDR Kensho will offset losses from the drop in SPDR Kensho's long position.The idea behind ClearBridge Sustainable Infrastructure and SPDR Kensho Intelligent 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.
| SPDR Kensho vs. SPDR STOXX Europe | SPDR Kensho vs. SPDR Bloomberg Barclays | SPDR Kensho vs. SPDR Kensho Future | SPDR Kensho vs. SPDR SP Kensho |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |