Correlation Between Clearbridge International and Guggenheim Risk
Can any of the company-specific risk be diversified away by investing in both Clearbridge International and Guggenheim Risk 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 International and Guggenheim Risk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge International Value and Guggenheim Risk Managed, you can compare the effects of market volatilities on Clearbridge International and Guggenheim Risk 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 International with a short position of Guggenheim Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge International and Guggenheim Risk.
Diversification Opportunities for Clearbridge International and Guggenheim Risk
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Clearbridge and Guggenheim is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge International Valu and Guggenheim Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Risk Managed and Clearbridge International 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 International Value are associated (or correlated) with Guggenheim Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Risk Managed has no effect on the direction of Clearbridge International i.e., Clearbridge International and Guggenheim Risk go up and down completely randomly.
Pair Corralation between Clearbridge International and Guggenheim Risk
Assuming the 90 days horizon Clearbridge International Value is expected to under-perform the Guggenheim Risk. In addition to that, Clearbridge International is 1.14 times more volatile than Guggenheim Risk Managed. It trades about -0.05 of its total potential returns per unit of risk. Guggenheim Risk Managed is currently generating about -0.03 per unit of volatility. If you would invest 3,455 in Guggenheim Risk Managed on September 12, 2024 and sell it today you would lose (59.00) from holding Guggenheim Risk Managed or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge International Valu vs. Guggenheim Risk Managed
Performance |
| Timeline |
| Clearbridge International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Guggenheim Risk Managed |
Clearbridge International and Guggenheim Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge International and Guggenheim Risk
The main advantage of trading using opposite Clearbridge International and Guggenheim Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge International position performs unexpectedly, Guggenheim Risk 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 Guggenheim Risk will offset losses from the drop in Guggenheim Risk's long position.The idea behind Clearbridge International Value and Guggenheim Risk Managed 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.
| Guggenheim Risk vs. Guggenheim Risk Managed | Guggenheim Risk vs. Guggenheim Risk Managed | Guggenheim Risk vs. Guggenheim Risk Managed | Guggenheim Risk vs. Lazard Global Listed |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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