Correlation Between Western Asset and Clearbridge International
Can any of the company-specific risk be diversified away by investing in both Western Asset and Clearbridge International 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 International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Total and Clearbridge International Value, you can compare the effects of market volatilities on Western Asset and Clearbridge International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Clearbridge International.
Diversification Opportunities for Western Asset and Clearbridge International
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Clearbridge is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Total and Clearbridge International Valu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge International 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 Total are associated (or correlated) with Clearbridge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge International has no effect on the direction of Western Asset i.e., Western Asset and Clearbridge International go up and down completely randomly.
Pair Corralation between Western Asset and Clearbridge International
Assuming the 90 days horizon Western Asset Total is expected to generate 0.21 times more return on investment than Clearbridge International. However, Western Asset Total is 4.74 times less risky than Clearbridge International. It trades about 0.12 of its potential returns per unit of risk. Clearbridge International Value is currently generating about -0.22 per unit of risk. If you would invest 903.00 in Western Asset Total on August 28, 2024 and sell it today you would earn a total of 4.00 from holding Western Asset Total or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Total vs. Clearbridge International Valu
Performance |
| Timeline |
| Western Asset Total |
| Clearbridge International |
Western Asset and Clearbridge International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Clearbridge International
The main advantage of trading using opposite Western Asset and Clearbridge International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Clearbridge International 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 International will offset losses from the drop in Clearbridge International's long position.| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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