Correlation Between Clearbridge Large and Clearbridge Aggressive
Can any of the company-specific risk be diversified away by investing in both Clearbridge Large and Clearbridge Aggressive 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 Clearbridge Aggressive 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 Clearbridge Aggressive Growth, you can compare the effects of market volatilities on Clearbridge Large and Clearbridge Aggressive 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 Clearbridge Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Large and Clearbridge Aggressive.
Diversification Opportunities for Clearbridge Large and Clearbridge Aggressive
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Clearbridge and Clearbridge is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Large Cap and Clearbridge Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Aggressive 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 Clearbridge Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Aggressive has no effect on the direction of Clearbridge Large i.e., Clearbridge Large and Clearbridge Aggressive go up and down completely randomly.
Pair Corralation between Clearbridge Large and Clearbridge Aggressive
Assuming the 90 days horizon Clearbridge Large Cap is expected to generate 0.42 times more return on investment than Clearbridge Aggressive. However, Clearbridge Large Cap is 2.35 times less risky than Clearbridge Aggressive. It trades about 0.07 of its potential returns per unit of risk. Clearbridge Aggressive Growth is currently generating about -0.02 per unit of risk. If you would invest 3,517 in Clearbridge Large Cap on August 30, 2024 and sell it today you would earn a total of 996.00 from holding Clearbridge Large Cap or generate 28.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Large Cap vs. Clearbridge Aggressive Growth
Performance |
| Timeline |
| Clearbridge Large Cap |
| Clearbridge Aggressive |
Clearbridge Large and Clearbridge Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Large and Clearbridge Aggressive
The main advantage of trading using opposite Clearbridge Large and Clearbridge Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Large position performs unexpectedly, Clearbridge Aggressive 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 Aggressive will offset losses from the drop in Clearbridge Aggressive's long position.The idea behind Clearbridge Large Cap and Clearbridge Aggressive Growth 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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