Correlation Between VictoryShares 500 and ClearBridge Large

Can any of the company-specific risk be diversified away by investing in both VictoryShares 500 and ClearBridge Large 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 VictoryShares 500 and ClearBridge Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VictoryShares 500 Enhanced and ClearBridge Large Cap, you can compare the effects of market volatilities on VictoryShares 500 and ClearBridge Large 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 VictoryShares 500 with a short position of ClearBridge Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares 500 and ClearBridge Large.

Diversification Opportunities for VictoryShares 500 and ClearBridge Large

0.58

Correlation Coefficient

VictoryShares 500  ClearBridge Large

Very weak diversification

The 3 months correlation between VictoryShares and ClearBridge is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares 500 Enhanced and ClearBridge Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearBridge Large Cap and VictoryShares 500 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 VictoryShares 500 Enhanced are associated (or correlated) with ClearBridge Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearBridge Large Cap has no effect on the direction of VictoryShares 500 i.e., VictoryShares 500 and ClearBridge Large go up and down completely randomly.

Pair Corralation between VictoryShares 500 and ClearBridge Large

Considering the 90-day investment horizon VictoryShares 500 is expected to generate 5.1 times less return on investment than ClearBridge Large. But when comparing it to its historical volatility, VictoryShares 500 Enhanced is 1.38 times less risky than ClearBridge Large. It trades about 0.03 of its potential returns per unit of risk. ClearBridge Large Cap is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,342  in ClearBridge Large Cap on October 11, 2024 and sell it today you would earn a total of  3,259  from holding ClearBridge Large Cap or generate 75.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

VictoryShares 500 Enhanced  vs.  ClearBridge Large Cap

VictoryShares 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VictoryShares 500 Enhanced has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, VictoryShares 500 is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

ClearBridge Large Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ClearBridge Large Cap are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ClearBridge Large is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VictoryShares 500 and ClearBridge Large

The main advantage of trading using opposite VictoryShares 500 and ClearBridge Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares 500 position performs unexpectedly, ClearBridge Large 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 Large will offset losses from the drop in ClearBridge Large's long position.

The idea behind VictoryShares 500 Enhanced and ClearBridge Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.