Correlation Between Cboe Vest and Clearbridge Energy

Can any of the company-specific risk be diversified away by investing in both Cboe Vest and Clearbridge Energy 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 Cboe Vest and Clearbridge Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cboe Vest Sp and Clearbridge Energy Mlp, you can compare the effects of market volatilities on Cboe Vest and Clearbridge Energy 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 Cboe Vest with a short position of Clearbridge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cboe Vest and Clearbridge Energy.

Diversification Opportunities for Cboe Vest and Clearbridge Energy

0.83

Correlation Coefficient

Cboe Vest  Clearbridge Energy

Very poor diversification

The 3 months correlation between Cboe and Clearbridge is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cboe Vest Sp and Clearbridge Energy Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Energy Mlp and Cboe Vest 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 Cboe Vest Sp are associated (or correlated) with Clearbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Energy Mlp has no effect on the direction of Cboe Vest i.e., Cboe Vest and Clearbridge Energy go up and down completely randomly.

Pair Corralation between Cboe Vest and Clearbridge Energy

Assuming the 90 days horizon Cboe Vest is expected to generate 2.33 times less return on investment than Clearbridge Energy. But when comparing it to its historical volatility, Cboe Vest Sp is 1.16 times less risky than Clearbridge Energy. It trades about 0.05 of its potential returns per unit of risk. Clearbridge Energy Mlp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,657  in Clearbridge Energy Mlp on October 5, 2024 and sell it today you would earn a total of  1,556  from holding Clearbridge Energy Mlp or generate 42.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.68%
Values	Daily Returns

Cboe Vest Sp  vs.  Clearbridge Energy Mlp

Cboe Vest Sp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cboe Vest Sp are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Cboe Vest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clearbridge Energy Mlp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Clearbridge Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cboe Vest and Clearbridge Energy

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

The idea behind Cboe Vest Sp and Clearbridge Energy 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 Commodity Directory module to find actively traded commodities issued by global exchanges.