Correlation Between Western Asset and Clearbridge Sustainability
Can any of the company-specific risk be diversified away by investing in both Western Asset and Clearbridge Sustainability 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 Western Asset and Clearbridge Sustainability into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Smash and Clearbridge Sustainability, you can compare the effects of market volatilities on Western Asset and Clearbridge Sustainability 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 Western Asset with a short position of Clearbridge Sustainability. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Clearbridge Sustainability.
Diversification Opportunities for Western Asset and Clearbridge Sustainability
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Clearbridge is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Smash and Clearbridge Sustainability in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Sustainability and Western Asset 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 Western Asset Smash are associated (or correlated) with Clearbridge Sustainability. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Sustainability has no effect on the direction of Western Asset i.e., Western Asset and Clearbridge Sustainability go up and down completely randomly.
Pair Corralation between Western Asset and Clearbridge Sustainability
Assuming the 90 days horizon Western Asset is expected to generate 4.65 times less return on investment than Clearbridge Sustainability. But when comparing it to its historical volatility, Western Asset Smash is 1.92 times less risky than Clearbridge Sustainability. It trades about 0.03 of its potential returns per unit of risk. Clearbridge Sustainability is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,148 in Clearbridge Sustainability on September 2, 2024 and sell it today you would earn a total of 694.00 from holding Clearbridge Sustainability or generate 32.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Smash vs. Clearbridge Sustainability
Performance |
| Timeline |
| Western Asset Smash |
| Clearbridge Sustainability |
Western Asset and Clearbridge Sustainability Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Clearbridge Sustainability
The main advantage of trading using opposite Western Asset and Clearbridge Sustainability positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Clearbridge Sustainability 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 Sustainability will offset losses from the drop in Clearbridge Sustainability's long position.| Western Asset vs. Franklin Mutual Beacon | Western Asset vs. Templeton Developing Markets | Western Asset vs. Franklin Mutual Global | Western Asset vs. Franklin Mutual Global |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |