Correlation Between Clearbridge Aggressive and Western Asset
Can any of the company-specific risk be diversified away by investing in both Clearbridge Aggressive 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 Aggressive 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 Aggressive Growth and Western Asset E, you can compare the effects of market volatilities on Clearbridge Aggressive 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 Aggressive with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Aggressive and Western Asset.
Diversification Opportunities for Clearbridge Aggressive and Western Asset
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Clearbridge and Western is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Aggressive Growth 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 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 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 Aggressive i.e., Clearbridge Aggressive and Western Asset go up and down completely randomly.
Pair Corralation between Clearbridge Aggressive and Western Asset
Assuming the 90 days horizon Clearbridge Aggressive Growth is expected to generate 2.22 times more return on investment than Western Asset. However, Clearbridge Aggressive is 2.22 times more volatile than Western Asset E. It trades about 0.03 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 13,879 in Clearbridge Aggressive Growth on August 27, 2024 and sell it today you would earn a total of 1,905 from holding Clearbridge Aggressive Growth or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Aggressive Growth vs. Western Asset E
Performance |
| Timeline |
| Clearbridge Aggressive |
| Western Asset E |
Clearbridge Aggressive and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Aggressive and Western Asset
The main advantage of trading using opposite Clearbridge Aggressive and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Aggressive 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.The idea behind Clearbridge Aggressive Growth and Western Asset E 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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