Correlation Between Western Asset and Clarkston Partners
Can any of the company-specific risk be diversified away by investing in both Western Asset and Clarkston Partners 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 Clarkston Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Premier and Clarkston Partners Fund, you can compare the effects of market volatilities on Western Asset and Clarkston Partners 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 Clarkston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Clarkston Partners.
Diversification Opportunities for Western Asset and Clarkston Partners
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Clarkston is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Premier and Clarkston Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkston Partners 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 Premier are associated (or correlated) with Clarkston Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkston Partners has no effect on the direction of Western Asset i.e., Western Asset and Clarkston Partners go up and down completely randomly.
Pair Corralation between Western Asset and Clarkston Partners
Assuming the 90 days horizon Western Asset Premier is expected to generate 1.46 times more return on investment than Clarkston Partners. However, Western Asset is 1.46 times more volatile than Clarkston Partners Fund. It trades about 0.02 of its potential returns per unit of risk. Clarkston Partners Fund is currently generating about 0.03 per unit of risk. If you would invest 91.00 in Western Asset Premier on August 26, 2024 and sell it today you would earn a total of 9.00 from holding Western Asset Premier or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.61% |
| Values | Daily Returns |
Western Asset Premier vs. Clarkston Partners Fund
Performance |
| Timeline |
| Western Asset Premier |
| Clarkston Partners |
Western Asset and Clarkston Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Clarkston Partners
The main advantage of trading using opposite Western Asset and Clarkston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Clarkston Partners 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 Clarkston Partners will offset losses from the drop in Clarkston Partners' long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Clarkston Partners vs. Clarkston Founders | Clarkston Partners vs. Clarkston Partners Fund | Clarkston Partners vs. Vanguard Target Retirement | Clarkston Partners vs. Vanguard Tax Managed Balanced |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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