Correlation Between Vanguard Total and Clearbridge Variable
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Clearbridge Variable 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 Vanguard Total and Clearbridge Variable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and Clearbridge Variable Appreciation, you can compare the effects of market volatilities on Vanguard Total and Clearbridge Variable 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 Vanguard Total with a short position of Clearbridge Variable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Clearbridge Variable.
Diversification Opportunities for Vanguard Total and Clearbridge Variable
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Clearbridge is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Clearbridge Variable Appreciat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Variable and Vanguard Total 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 Vanguard Total Stock are associated (or correlated) with Clearbridge Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Variable has no effect on the direction of Vanguard Total i.e., Vanguard Total and Clearbridge Variable go up and down completely randomly.
Pair Corralation between Vanguard Total and Clearbridge Variable
Assuming the 90 days horizon Vanguard Total is expected to generate 1.1 times less return on investment than Clearbridge Variable. In addition to that, Vanguard Total is 1.12 times more volatile than Clearbridge Variable Appreciation. It trades about 0.13 of its total potential returns per unit of risk. Clearbridge Variable Appreciation is currently generating about 0.16 per unit of volatility. If you would invest 6,884 in Clearbridge Variable Appreciation on August 25, 2024 and sell it today you would earn a total of 203.00 from holding Clearbridge Variable Appreciation or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vanguard Total Stock vs. Clearbridge Variable Appreciat
Performance |
| Timeline |
| Vanguard Total Stock |
| Clearbridge Variable |
Vanguard Total and Clearbridge Variable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Clearbridge Variable
The main advantage of trading using opposite Vanguard Total and Clearbridge Variable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Clearbridge Variable 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 Variable will offset losses from the drop in Clearbridge Variable's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard Small Cap Index | Vanguard Total vs. Vanguard Reit Index |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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