Correlation Between SPDR Portfolio and ClearBridge Large
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and ClearBridge Large 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 SPDR Portfolio and ClearBridge Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio SP and ClearBridge Large Cap, you can compare the effects of market volatilities on SPDR Portfolio and ClearBridge Large 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 SPDR Portfolio with a short position of ClearBridge Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and ClearBridge Large.
Diversification Opportunities for SPDR Portfolio and ClearBridge Large
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and ClearBridge is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and ClearBridge Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearBridge Large Cap and SPDR Portfolio 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 SPDR Portfolio SP are associated (or correlated) with ClearBridge Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearBridge Large Cap has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and ClearBridge Large go up and down completely randomly.
Pair Corralation between SPDR Portfolio and ClearBridge Large
Given the investment horizon of 90 days SPDR Portfolio is expected to generate 1.18 times less return on investment than ClearBridge Large. But when comparing it to its historical volatility, SPDR Portfolio SP is 1.01 times less risky than ClearBridge Large. It trades about 0.1 of its potential returns per unit of risk. ClearBridge Large Cap is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,350 in ClearBridge Large Cap on August 23, 2024 and sell it today you would earn a total of 3,285 from holding ClearBridge Large Cap or generate 75.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio SP vs. ClearBridge Large Cap
Performance |
| Timeline |
| SPDR Portfolio SP |
| ClearBridge Large Cap |
SPDR Portfolio and ClearBridge Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and ClearBridge Large
The main advantage of trading using opposite SPDR Portfolio and ClearBridge Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, ClearBridge Large 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 Large will offset losses from the drop in ClearBridge Large's long position.| SPDR Portfolio vs. Vanguard Russell 1000 | SPDR Portfolio vs. Vanguard Russell 2000 | SPDR Portfolio vs. Vanguard Mega Cap | SPDR Portfolio vs. Vanguard Russell 1000 |
| ClearBridge Large vs. Vanguard Russell 1000 | ClearBridge Large vs. Vanguard Russell 2000 | ClearBridge Large vs. Vanguard Mega Cap | ClearBridge Large vs. Vanguard Russell 1000 |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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