Correlation Between ClearBridge Large and First Trust
Can any of the company-specific risk be diversified away by investing in both ClearBridge Large and First Trust 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 Large and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ClearBridge Large Cap and First Trust Mid, you can compare the effects of market volatilities on ClearBridge Large and First Trust 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 Large with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearBridge Large and First Trust.
Diversification Opportunities for ClearBridge Large and First Trust
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ClearBridge and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ClearBridge Large Cap and First Trust Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Mid and ClearBridge Large 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 Large Cap are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Mid has no effect on the direction of ClearBridge Large i.e., ClearBridge Large and First Trust go up and down completely randomly.
Pair Corralation between ClearBridge Large and First Trust
Given the investment horizon of 90 days ClearBridge Large Cap is expected to generate 0.82 times more return on investment than First Trust. However, ClearBridge Large Cap is 1.22 times less risky than First Trust. It trades about 0.11 of its potential returns per unit of risk. First Trust Mid is currently generating about 0.07 per unit of risk. If you would invest 5,536 in ClearBridge Large Cap on September 12, 2024 and sell it today you would earn a total of 2,258 from holding ClearBridge Large Cap or generate 40.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ClearBridge Large Cap vs. First Trust Mid
Performance |
| Timeline |
| ClearBridge Large Cap |
| First Trust Mid |
ClearBridge Large and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ClearBridge Large and First Trust
The main advantage of trading using opposite ClearBridge Large and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearBridge Large position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| ClearBridge Large vs. ClearBridge Dividend Strategy | ClearBridge Large vs. Janus Henderson Small | ClearBridge Large vs. Janus Henderson SmallMid | ClearBridge Large vs. Principal Quality ETF |
| First Trust vs. Vanguard Mid Cap Growth | First Trust vs. iShares Russell Mid Cap | First Trust vs. ARK Innovation ETF | First Trust vs. iShares SP Mid Cap |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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