Correlation Between Clearbridge Aggressive and Vanguard Short-term
Can any of the company-specific risk be diversified away by investing in both Clearbridge Aggressive and Vanguard Short-term 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 Aggressive and Vanguard Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge Aggressive Growth and Vanguard Short Term Government, you can compare the effects of market volatilities on Clearbridge Aggressive and Vanguard Short-term 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 Aggressive with a short position of Vanguard Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Aggressive and Vanguard Short-term.
Diversification Opportunities for Clearbridge Aggressive and Vanguard Short-term
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clearbridge and VANGUARD is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Aggressive Growth and Vanguard Short Term Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term and Clearbridge Aggressive 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 Aggressive Growth are associated (or correlated) with Vanguard Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Clearbridge Aggressive i.e., Clearbridge Aggressive and Vanguard Short-term go up and down completely randomly.
Pair Corralation between Clearbridge Aggressive and Vanguard Short-term
Assuming the 90 days horizon Clearbridge Aggressive Growth is expected to generate 12.23 times more return on investment than Vanguard Short-term. However, Clearbridge Aggressive is 12.23 times more volatile than Vanguard Short Term Government. It trades about 0.01 of its potential returns per unit of risk. Vanguard Short Term Government is currently generating about 0.12 per unit of risk. If you would invest 5,262 in Clearbridge Aggressive Growth on August 29, 2024 and sell it today you would earn a total of 191.00 from holding Clearbridge Aggressive Growth or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Aggressive Growth vs. Vanguard Short Term Government
Performance |
| Timeline |
| Clearbridge Aggressive |
| Vanguard Short Term |
Clearbridge Aggressive and Vanguard Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Aggressive and Vanguard Short-term
The main advantage of trading using opposite Clearbridge Aggressive and Vanguard Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Aggressive position performs unexpectedly, Vanguard Short-term 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 Vanguard Short-term will offset losses from the drop in Vanguard Short-term's long position.The idea behind Clearbridge Aggressive Growth and Vanguard Short Term Government 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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