Correlation Between Clearbridge Energy and Kayne Anderson

Can any of the company-specific risk be diversified away by investing in both Clearbridge Energy and Kayne Anderson 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 Kayne Anderson 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 Kayne Anderson MLP, you can compare the effects of market volatilities on Clearbridge Energy and Kayne Anderson 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 Kayne Anderson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Energy and Kayne Anderson.

Diversification Opportunities for Clearbridge Energy and Kayne Anderson

0.98

Correlation Coefficient

Clearbridge Energy  Kayne Anderson

Almost no diversification

The 3 months correlation between Clearbridge and Kayne is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and Kayne Anderson MLP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kayne Anderson MLP 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 Kayne Anderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kayne Anderson MLP has no effect on the direction of Clearbridge Energy i.e., Clearbridge Energy and Kayne Anderson go up and down completely randomly.

Pair Corralation between Clearbridge Energy and Kayne Anderson

Considering the 90-day investment horizon Clearbridge Energy is expected to generate 1.05 times less return on investment than Kayne Anderson. In addition to that, Clearbridge Energy is 1.0 times more volatile than Kayne Anderson MLP. It trades about 0.23 of its total potential returns per unit of risk. Kayne Anderson MLP is currently generating about 0.24 per unit of volatility. If you would invest  1,065  in Kayne Anderson MLP on September 13, 2024 and sell it today you would earn a total of  218.00  from holding Kayne Anderson MLP or generate 20.47% return on investment over 90 days.

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

Clearbridge Energy Mlp  vs.  Kayne Anderson MLP

Clearbridge Energy Mlp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of very uncertain primary indicators, Clearbridge Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Kayne Anderson MLP

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kayne Anderson MLP are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Kayne Anderson displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clearbridge Energy and Kayne Anderson

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

The idea behind Clearbridge Energy Mlp and Kayne Anderson MLP 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.