Correlation Between Clearbridge Small and Western Asset
Can any of the company-specific risk be diversified away by investing in both Clearbridge Small and Western Asset 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 Small and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge Small Cap and Western Asset E, you can compare the effects of market volatilities on Clearbridge Small and Western Asset 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 Small with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Small and Western Asset.
Diversification Opportunities for Clearbridge Small and Western Asset
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Clearbridge and Western is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Small Cap and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E and Clearbridge Small 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 Small Cap are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of Clearbridge Small i.e., Clearbridge Small and Western Asset go up and down completely randomly.
Pair Corralation between Clearbridge Small and Western Asset
Assuming the 90 days horizon Clearbridge Small Cap is expected to generate 2.27 times more return on investment than Western Asset. However, Clearbridge Small is 2.27 times more volatile than Western Asset E. It trades about 0.05 of its potential returns per unit of risk. Western Asset E is currently generating about 0.02 per unit of risk. If you would invest 5,922 in Clearbridge Small Cap on August 27, 2024 and sell it today you would earn a total of 1,819 from holding Clearbridge Small Cap or generate 30.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Small Cap vs. Western Asset E
Performance |
| Timeline |
| Clearbridge Small Cap |
| Western Asset E |
Clearbridge Small and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Small and Western Asset
The main advantage of trading using opposite Clearbridge Small and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Small position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Clearbridge Small vs. Ab High Income | Clearbridge Small vs. Metropolitan West High | Clearbridge Small vs. Needham Aggressive Growth | Clearbridge Small vs. Ab Global Risk |
| Western Asset vs. Fidelity Capital Income | Western Asset vs. Siit High Yield | Western Asset vs. Dunham High Yield | Western Asset vs. Pace High Yield |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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