Correlation Between VictoryShares and ClearBridge Large

Can any of the company-specific risk be diversified away by investing in both VictoryShares 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 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 and ClearBridge Large Cap, you can compare the effects of market volatilities on VictoryShares 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 with a short position of ClearBridge Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares and ClearBridge Large.

Diversification Opportunities for VictoryShares and ClearBridge Large

-0.18

Correlation Coefficient

VictoryShares  ClearBridge Large

Good diversification

The 3 months correlation between VictoryShares and ClearBridge is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares 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 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 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 i.e., VictoryShares and ClearBridge Large go up and down completely randomly.

Pair Corralation between VictoryShares and ClearBridge Large

Considering the 90-day investment horizon VictoryShares is expected to generate 135.83 times more return on investment than ClearBridge Large. However, VictoryShares is 135.83 times more volatile than ClearBridge Large Cap. It trades about 0.12 of its potential returns per unit of risk. ClearBridge Large Cap is currently generating about 0.12 per unit of risk. If you would invest  61.00  in VictoryShares on October 11, 2024 and sell it today you would earn a total of  149.00  from holding VictoryShares or generate 244.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.14%
Values	Daily Returns

VictoryShares  vs.  ClearBridge Large Cap

VictoryShares

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days VictoryShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile forward indicators, VictoryShares showed solid returns over the last few months and may actually be approaching a breakup point.

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 and ClearBridge Large

The main advantage of trading using opposite VictoryShares and ClearBridge Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares 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 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.