Correlation Between Clearbridge Energy and Alger Capital
Can any of the company-specific risk be diversified away by investing in both Clearbridge Energy and Alger Capital 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 Clearbridge Energy and Alger Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge Energy Mlp and Alger Capital Appreciation, you can compare the effects of market volatilities on Clearbridge Energy and Alger Capital 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 Clearbridge Energy with a short position of Alger Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Energy and Alger Capital.
Diversification Opportunities for Clearbridge Energy and Alger Capital
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Clearbridge and Alger is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and Alger Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Capital Apprec and Clearbridge Energy 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 Clearbridge Energy Mlp are associated (or correlated) with Alger Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Capital Apprec has no effect on the direction of Clearbridge Energy i.e., Clearbridge Energy and Alger Capital go up and down completely randomly.
Pair Corralation between Clearbridge Energy and Alger Capital
Assuming the 90 days horizon Clearbridge Energy Mlp is expected to generate 0.85 times more return on investment than Alger Capital. However, Clearbridge Energy Mlp is 1.18 times less risky than Alger Capital. It trades about 0.38 of its potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.22 per unit of risk. If you would invest 4,711 in Clearbridge Energy Mlp on August 28, 2024 and sell it today you would earn a total of 779.00 from holding Clearbridge Energy Mlp or generate 16.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Energy Mlp vs. Alger Capital Appreciation
Performance |
| Timeline |
| Clearbridge Energy Mlp |
| Alger Capital Apprec |
Clearbridge Energy and Alger Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Energy and Alger Capital
The main advantage of trading using opposite Clearbridge Energy and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Energy position performs unexpectedly, Alger Capital 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 Alger Capital will offset losses from the drop in Alger Capital's long position.| Clearbridge Energy vs. Baron Health Care | Clearbridge Energy vs. Eventide Healthcare Life | Clearbridge Energy vs. Prudential Health Sciences | Clearbridge Energy vs. Alger Health Sciences |
| Alger Capital vs. Financials Ultrasector Profund | Alger Capital vs. Goldman Sachs Financial | Alger Capital vs. Royce Global Financial | Alger Capital vs. Prudential Jennison Financial |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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