Correlation Between Us Government and Clearbridge Small
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and Clearbridge Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Clearbridge Small Cap, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of Clearbridge Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Clearbridge Small.
Diversification Opportunities for Us Government and Clearbridge Small
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between USGFX and Clearbridge is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities 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 Us Government 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 Us Government Securities 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 Us Government i.e., Us Government and Clearbridge Small go up and down completely randomly.
Pair Corralation between Us Government and Clearbridge Small
Assuming the 90 days horizon Us Government Securities is expected to generate 0.34 times more return on investment than Clearbridge Small. However, Us Government Securities is 2.95 times less risky than Clearbridge Small. It trades about 0.28 of its potential returns per unit of risk. Clearbridge Small Cap is currently generating about -0.22 per unit of risk. If you would invest 1,175 in Us Government Securities on November 29, 2024 and sell it today you would earn a total of 22.00 from holding Us Government Securities or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. Clearbridge Small Cap
Performance |
| Timeline |
| Us Government Securities |
| Clearbridge Small Cap |
Us Government and Clearbridge Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Clearbridge Small
The main advantage of trading using opposite Us Government and Clearbridge Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. Seix Govt Sec | Us Government vs. Rbc Short Duration | Us Government vs. Touchstone Ultra Short | Us Government vs. Fidelity Flex Servative |
| Clearbridge Small vs. Wilmington Funds | Clearbridge Small vs. Doubleline Emerging Markets | Clearbridge Small vs. Jpmorgan Trust I | Clearbridge Small vs. Prudential Emerging Markets |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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