Correlation Between Clearbridge Large and Multimanager Lifestyle
Can any of the company-specific risk be diversified away by investing in both Clearbridge Large and Multimanager Lifestyle 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 Multimanager Lifestyle 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 Multimanager Lifestyle Moderate, you can compare the effects of market volatilities on Clearbridge Large and Multimanager Lifestyle 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 Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Large and Multimanager Lifestyle.
Diversification Opportunities for Clearbridge Large and Multimanager Lifestyle
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clearbridge and MULTIMANAGER is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Large Cap and Multimanager Lifestyle Moderat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle 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 Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of Clearbridge Large i.e., Clearbridge Large and Multimanager Lifestyle go up and down completely randomly.
Pair Corralation between Clearbridge Large and Multimanager Lifestyle
Assuming the 90 days horizon Clearbridge Large Cap is expected to generate 1.78 times more return on investment than Multimanager Lifestyle. However, Clearbridge Large is 1.78 times more volatile than Multimanager Lifestyle Moderate. It trades about 0.12 of its potential returns per unit of risk. Multimanager Lifestyle Moderate is currently generating about 0.14 per unit of risk. If you would invest 3,914 in Clearbridge Large Cap on September 2, 2024 and sell it today you would earn a total of 784.00 from holding Clearbridge Large Cap or generate 20.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Large Cap vs. Multimanager Lifestyle Moderat
Performance |
| Timeline |
| Clearbridge Large Cap |
| Multimanager Lifestyle |
Clearbridge Large and Multimanager Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Large and Multimanager Lifestyle
The main advantage of trading using opposite Clearbridge Large and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Large position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle's long position.| Clearbridge Large vs. Franklin Mutual Beacon | Clearbridge Large vs. Templeton Developing Markets | Clearbridge Large vs. Franklin Mutual Global | Clearbridge Large vs. Franklin Mutual Global |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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