Correlation Between Vanguard Large and ClearBridge Dividend
Can any of the company-specific risk be diversified away by investing in both Vanguard Large and ClearBridge Dividend 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 Large and ClearBridge Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Large Cap Index and ClearBridge Dividend Strategy, you can compare the effects of market volatilities on Vanguard Large and ClearBridge Dividend 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 Large with a short position of ClearBridge Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Large and ClearBridge Dividend.
Diversification Opportunities for Vanguard Large and ClearBridge Dividend
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and ClearBridge is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Large Cap Index and ClearBridge Dividend Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearBridge Dividend and Vanguard Large 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 Large Cap Index are associated (or correlated) with ClearBridge Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearBridge Dividend has no effect on the direction of Vanguard Large i.e., Vanguard Large and ClearBridge Dividend go up and down completely randomly.
Pair Corralation between Vanguard Large and ClearBridge Dividend
Allowing for the 90-day total investment horizon Vanguard Large is expected to generate 1.33 times less return on investment than ClearBridge Dividend. In addition to that, Vanguard Large is 1.13 times more volatile than ClearBridge Dividend Strategy. It trades about 0.17 of its total potential returns per unit of risk. ClearBridge Dividend Strategy is currently generating about 0.25 per unit of volatility. If you would invest 5,105 in ClearBridge Dividend Strategy on August 30, 2024 and sell it today you would earn a total of 221.00 from holding ClearBridge Dividend Strategy or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Large Cap Index vs. ClearBridge Dividend Strategy
Performance |
| Timeline |
| Vanguard Large Cap |
| ClearBridge Dividend |
Vanguard Large and ClearBridge Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Large and ClearBridge Dividend
The main advantage of trading using opposite Vanguard Large and ClearBridge Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Large position performs unexpectedly, ClearBridge Dividend 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 Dividend will offset losses from the drop in ClearBridge Dividend's long position.| Vanguard Large vs. Vanguard Mid Cap Index | Vanguard Large vs. Vanguard Small Cap Index | Vanguard Large vs. Vanguard Extended Market | Vanguard Large vs. Vanguard Small Cap Growth |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |