Correlation Between Clearbridge International and Clearbridge Large
Can any of the company-specific risk be diversified away by investing in both Clearbridge International and Clearbridge 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 International and Clearbridge Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge International Value and Clearbridge Large Cap, you can compare the effects of market volatilities on Clearbridge International and Clearbridge 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 International with a short position of Clearbridge Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge International and Clearbridge Large.
Diversification Opportunities for Clearbridge International and Clearbridge Large
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Clearbridge and Clearbridge is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge International Valu and Clearbridge Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Large Cap and Clearbridge International 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 International Value are associated (or correlated) with Clearbridge Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Large Cap has no effect on the direction of Clearbridge International i.e., Clearbridge International and Clearbridge Large go up and down completely randomly.
Pair Corralation between Clearbridge International and Clearbridge Large
Assuming the 90 days horizon Clearbridge International Value is expected to under-perform the Clearbridge Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Clearbridge International Value is 1.09 times less risky than Clearbridge Large. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Clearbridge Large Cap is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,242 in Clearbridge Large Cap on August 30, 2024 and sell it today you would earn a total of 271.00 from holding Clearbridge Large Cap or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge International Valu vs. Clearbridge Large Cap
Performance |
| Timeline |
| Clearbridge International |
| Clearbridge Large Cap |
Clearbridge International and Clearbridge Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge International and Clearbridge Large
The main advantage of trading using opposite Clearbridge International and Clearbridge Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge International position performs unexpectedly, Clearbridge 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 Clearbridge Large will offset losses from the drop in Clearbridge Large's long position.The idea behind Clearbridge International Value and Clearbridge 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.
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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