Correlation Between Vanguard Russell and ClearBridge Large

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Can any of the company-specific risk be diversified away by investing in both Vanguard Russell 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 Vanguard Russell and ClearBridge Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Russell 1000 and ClearBridge Large Cap, you can compare the effects of market volatilities on Vanguard Russell 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 Vanguard Russell with a short position of ClearBridge Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and ClearBridge Large.

Diversification Opportunities for Vanguard Russell and ClearBridge Large

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Vanguard and ClearBridge is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 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 Vanguard Russell 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 Russell 1000 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 Vanguard Russell i.e., Vanguard Russell and ClearBridge Large go up and down completely randomly.

Pair Corralation between Vanguard Russell and ClearBridge Large

Given the investment horizon of 90 days Vanguard Russell 1000 is expected to generate 1.2 times more return on investment than ClearBridge Large. However, Vanguard Russell is 1.2 times more volatile than ClearBridge Large Cap. It trades about 0.11 of its potential returns per unit of risk. ClearBridge Large Cap is currently generating about 0.11 per unit of risk. If you would invest  9,458  in Vanguard Russell 1000 on August 23, 2024 and sell it today you would earn a total of  674.00  from holding Vanguard Russell 1000 or generate 7.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Vanguard Russell 1000  vs.  ClearBridge Large Cap

 Performance 
       Timeline  
Vanguard Russell 1000 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Russell 1000 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Vanguard Russell may actually be approaching a critical reversion point that can send shares even higher in December 2024.
ClearBridge Large Cap 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ClearBridge Large Cap are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, ClearBridge Large may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Vanguard Russell and ClearBridge Large Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Russell and ClearBridge Large

The main advantage of trading using opposite Vanguard Russell and ClearBridge Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Russell 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.
The idea behind Vanguard Russell 1000 and ClearBridge Large Cap 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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