Correlation Between Sarofim Equity and Clearbridge Small
Can any of the company-specific risk be diversified away by investing in both Sarofim Equity and Clearbridge Small 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 Sarofim Equity and Clearbridge Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarofim Equity and Clearbridge Small Cap, you can compare the effects of market volatilities on Sarofim Equity and Clearbridge Small 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 Sarofim Equity with a short position of Clearbridge Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarofim Equity and Clearbridge Small.
Diversification Opportunities for Sarofim Equity and Clearbridge Small
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sarofim and Clearbridge is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sarofim Equity and Clearbridge Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Small Cap and Sarofim Equity 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 Sarofim Equity are associated (or correlated) with Clearbridge Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Small Cap has no effect on the direction of Sarofim Equity i.e., Sarofim Equity and Clearbridge Small go up and down completely randomly.
Pair Corralation between Sarofim Equity and Clearbridge Small
Assuming the 90 days horizon Sarofim Equity is expected to generate 0.55 times more return on investment than Clearbridge Small. However, Sarofim Equity is 1.83 times less risky than Clearbridge Small. It trades about 0.05 of its potential returns per unit of risk. Clearbridge Small Cap is currently generating about -0.03 per unit of risk. If you would invest 1,718 in Sarofim Equity on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Sarofim Equity or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sarofim Equity vs. Clearbridge Small Cap
Performance |
| Timeline |
| Sarofim Equity |
| Clearbridge Small Cap |
Sarofim Equity and Clearbridge Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarofim Equity and Clearbridge Small
The main advantage of trading using opposite Sarofim Equity and Clearbridge Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarofim Equity position performs unexpectedly, Clearbridge Small 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 Small will offset losses from the drop in Clearbridge Small's long position.| Sarofim Equity vs. Vanguard Total Stock | Sarofim Equity vs. Vanguard 500 Index | Sarofim Equity vs. Vanguard Total Stock | Sarofim Equity vs. Vanguard Total Stock |
| Clearbridge Small vs. Sp Midcap Index | Clearbridge Small vs. Sp 500 Index | Clearbridge Small vs. Nasdaq 100 Index Fund | Clearbridge Small vs. Deutsche Sp 500 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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