Correlation Between Clearbridge Energy and Baird Municipal
Can any of the company-specific risk be diversified away by investing in both Clearbridge Energy and Baird Municipal 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 Baird Municipal 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 Baird Municipal Bond, you can compare the effects of market volatilities on Clearbridge Energy and Baird Municipal 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 Baird Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Energy and Baird Municipal.
Diversification Opportunities for Clearbridge Energy and Baird Municipal
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Clearbridge and Baird is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and Baird Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Municipal Bond 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 Baird Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Municipal Bond has no effect on the direction of Clearbridge Energy i.e., Clearbridge Energy and Baird Municipal go up and down completely randomly.
Pair Corralation between Clearbridge Energy and Baird Municipal
Assuming the 90 days horizon Clearbridge Energy Mlp is expected to generate 5.5 times more return on investment than Baird Municipal. However, Clearbridge Energy is 5.5 times more volatile than Baird Municipal Bond. It trades about 0.16 of its potential returns per unit of risk. Baird Municipal Bond is currently generating about 0.11 per unit of risk. If you would invest 3,707 in Clearbridge Energy Mlp on September 2, 2024 and sell it today you would earn a total of 1,875 from holding Clearbridge Energy Mlp or generate 50.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Energy Mlp vs. Baird Municipal Bond
Performance |
| Timeline |
| Clearbridge Energy Mlp |
| Baird Municipal Bond |
Clearbridge Energy and Baird Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Energy and Baird Municipal
The main advantage of trading using opposite Clearbridge Energy and Baird Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Energy position performs unexpectedly, Baird Municipal 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 Baird Municipal will offset losses from the drop in Baird Municipal's long position.| Clearbridge Energy vs. Jennison Natural Resources | Clearbridge Energy vs. Icon Natural Resources | Clearbridge Energy vs. Tortoise Energy Independence |
| Baird Municipal vs. Tax Managed Mid Small | Baird Municipal vs. Small Cap Stock | Baird Municipal vs. Fidelity Advisor Diversified | Baird Municipal vs. T Rowe Price |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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