Correlation Between Western Asset and Clearbridge Mid
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Clearbridge Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset California and Clearbridge Mid Cap, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Clearbridge Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Clearbridge Mid.
Diversification Opportunities for Western Asset and Clearbridge Mid
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Clearbridge is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset California 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 Western Asset 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 Western Asset California 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 Western Asset i.e., Western Asset and Clearbridge Mid go up and down completely randomly.
Pair Corralation between Western Asset and Clearbridge Mid
Assuming the 90 days horizon Western Asset is expected to generate 79.2 times less return on investment than Clearbridge Mid. But when comparing it to its historical volatility, Western Asset California is 3.9 times less risky than Clearbridge Mid. It trades about 0.01 of its potential returns per unit of risk. 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 | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Western Asset California vs. Clearbridge Mid Cap
Performance |
| Timeline |
| Western Asset California |
| Clearbridge Mid Cap |
Western Asset and Clearbridge Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Clearbridge Mid
The main advantage of trading using opposite Western Asset and Clearbridge Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
| Clearbridge Mid vs. Clearbridge Aggressive Growth | Clearbridge Mid vs. Clearbridge Small Cap | Clearbridge Mid vs. Qs International Equity | Clearbridge Mid vs. Clearbridge Appreciation Fund |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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