Correlation Between Clearbridge International and Clearbridge Mid
Can any of the company-specific risk be diversified away by investing in both Clearbridge International and Clearbridge Mid 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 Clearbridge Mid 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 Clearbridge Mid Cap, you can compare the effects of market volatilities on Clearbridge International and Clearbridge Mid 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 Clearbridge Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge International and Clearbridge Mid.
Diversification Opportunities for Clearbridge International and Clearbridge Mid
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Clearbridge and Clearbridge is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge International Valu and Clearbridge Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Mid Cap 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 Clearbridge Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Mid Cap has no effect on the direction of Clearbridge International i.e., Clearbridge International and Clearbridge Mid go up and down completely randomly.
Pair Corralation between Clearbridge International and Clearbridge Mid
Assuming the 90 days horizon Clearbridge International Value is expected to under-perform the Clearbridge Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Clearbridge International Value is 1.02 times less risky than Clearbridge Mid. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Clearbridge Mid Cap is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,122 in Clearbridge Mid Cap on August 28, 2024 and sell it today you would earn a total of 544.00 from holding Clearbridge Mid Cap or generate 13.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Clearbridge International Valu vs. Clearbridge Mid Cap
Performance |
| Timeline |
| Clearbridge International |
| Clearbridge Mid Cap |
Clearbridge International and Clearbridge Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge International and Clearbridge Mid
The main advantage of trading using opposite Clearbridge International and Clearbridge Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge International position performs unexpectedly, Clearbridge Mid 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 Clearbridge Mid will offset losses from the drop in Clearbridge Mid's long position.The idea behind Clearbridge International Value and Clearbridge Mid Cap 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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