Correlation Between Clearbridge Sustainability and Americafirst Large
Can any of the company-specific risk be diversified away by investing in both Clearbridge Sustainability and Americafirst Large 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 Sustainability and Americafirst Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge Sustainability and Americafirst Large Cap, you can compare the effects of market volatilities on Clearbridge Sustainability and Americafirst Large 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 Sustainability with a short position of Americafirst Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Sustainability and Americafirst Large.
Diversification Opportunities for Clearbridge Sustainability and Americafirst Large
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Clearbridge and Americafirst is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Sustainability and Americafirst Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Large Cap and Clearbridge Sustainability 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 Sustainability are associated (or correlated) with Americafirst Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Large Cap has no effect on the direction of Clearbridge Sustainability i.e., Clearbridge Sustainability and Americafirst Large go up and down completely randomly.
Pair Corralation between Clearbridge Sustainability and Americafirst Large
Assuming the 90 days horizon Clearbridge Sustainability is expected to generate 0.84 times more return on investment than Americafirst Large. However, Clearbridge Sustainability is 1.2 times less risky than Americafirst Large. It trades about -0.24 of its potential returns per unit of risk. Americafirst Large Cap is currently generating about -0.27 per unit of risk. If you would invest 2,688 in Clearbridge Sustainability on November 29, 2024 and sell it today you would lose (84.00) from holding Clearbridge Sustainability or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Sustainability vs. Americafirst Large Cap
Performance |
| Timeline |
| Clearbridge Sustainability |
| Americafirst Large Cap |
Clearbridge Sustainability and Americafirst Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Sustainability and Americafirst Large
The main advantage of trading using opposite Clearbridge Sustainability and Americafirst Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Sustainability position performs unexpectedly, Americafirst Large 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 Americafirst Large will offset losses from the drop in Americafirst Large's long position.The idea behind Clearbridge Sustainability and Americafirst Large Cap 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.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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