Correlation Between Quantitative Longshort and Clearbridge Appreciation

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

By analyzing existing cross correlation between Quantitative Longshort Equity and Clearbridge Appreciation Fund, you can compare the effects of market volatilities on Quantitative Longshort and Clearbridge Appreciation 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 Quantitative Longshort with a short position of Clearbridge Appreciation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantitative Longshort and Clearbridge Appreciation.

Diversification Opportunities for Quantitative Longshort and Clearbridge Appreciation

0.86

Correlation Coefficient

Quantitative Longshort  Clearbridge Appreciation

Very poor diversification

The 3 months correlation between Quantitative and Clearbridge is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Quantitative Longshort Equity and Clearbridge Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Appreciation and Quantitative Longshort 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 Quantitative Longshort Equity are associated (or correlated) with Clearbridge Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Appreciation has no effect on the direction of Quantitative Longshort i.e., Quantitative Longshort and Clearbridge Appreciation go up and down completely randomly.

Pair Corralation between Quantitative Longshort and Clearbridge Appreciation

Assuming the 90 days horizon Quantitative Longshort is expected to generate 1.08 times less return on investment than Clearbridge Appreciation. But when comparing it to its historical volatility, Quantitative Longshort Equity is 1.54 times less risky than Clearbridge Appreciation. It trades about 0.21 of its potential returns per unit of risk. Clearbridge Appreciation Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,461  in Clearbridge Appreciation Fund on September 13, 2024 and sell it today you would earn a total of  208.00  from holding Clearbridge Appreciation Fund or generate 6.01% return on investment over 90 days.

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

Quantitative Longshort Equity  vs.  Clearbridge Appreciation Fund

Quantitative Longshort

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Quantitative Longshort Equity are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Quantitative Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clearbridge Appreciation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Appreciation Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Clearbridge Appreciation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Quantitative Longshort and Clearbridge Appreciation

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

The idea behind Quantitative Longshort Equity and Clearbridge Appreciation Fund 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.