Correlation Between Vanguard Total and Clearbridge Aggressive

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Can any of the company-specific risk be diversified away by investing in both Vanguard Total 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 Vanguard Total and Clearbridge Aggressive 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 Aggressive Growth, you can compare the effects of market volatilities on Vanguard Total 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 Vanguard Total with a short position of Clearbridge Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Clearbridge Aggressive.

Diversification Opportunities for Vanguard Total and Clearbridge Aggressive

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Vanguard and Clearbridge is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Clearbridge Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Aggressive 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 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 Vanguard Total i.e., Vanguard Total and Clearbridge Aggressive go up and down completely randomly.

Pair Corralation between Vanguard Total and Clearbridge Aggressive

Assuming the 90 days horizon Vanguard Total Stock is expected to generate 0.38 times more return on investment than Clearbridge Aggressive. However, Vanguard Total Stock is 2.63 times less risky than Clearbridge Aggressive. It trades about 0.12 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  9,080  in Vanguard Total Stock on September 13, 2024 and sell it today you would earn a total of  5,612  from holding Vanguard Total Stock or generate 61.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy99.8%
ValuesDaily Returns

Vanguard Total Stock  vs.  Clearbridge Aggressive Growth

 Performance 
       Timeline  
Vanguard Total Stock 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Clearbridge Aggressive 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Good
Over the last 90 days Clearbridge Aggressive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Vanguard Total and Clearbridge Aggressive Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Total and Clearbridge Aggressive

The main advantage of trading using opposite Vanguard Total and Clearbridge Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Vanguard Total Stock 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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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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