Correlation Between Heartland Value and Clearbridge Appreciation

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

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

Diversification Opportunities for Heartland Value and Clearbridge Appreciation

0.93

Correlation Coefficient

Heartland Value  Clearbridge Appreciation

Almost no diversification

The 3 months correlation between Heartland and Clearbridge is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Clearbridge Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Appreciation and Heartland Value 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 Heartland Value Plus 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 Heartland Value i.e., Heartland Value and Clearbridge Appreciation go up and down completely randomly.

Pair Corralation between Heartland Value and Clearbridge Appreciation

Assuming the 90 days horizon Heartland Value Plus is expected to generate 1.74 times more return on investment than Clearbridge Appreciation. However, Heartland Value is 1.74 times more volatile than Clearbridge Appreciation Fund. It trades about 0.14 of its potential returns per unit of risk. Clearbridge Appreciation Fund is currently generating about 0.18 per unit of risk. If you would invest  3,647  in Heartland Value Plus on September 4, 2024 and sell it today you would earn a total of  404.00  from holding Heartland Value Plus or generate 11.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Heartland Value Plus  vs.  Clearbridge Appreciation Fund

Heartland Value Plus

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Value Plus are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Heartland Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Clearbridge Appreciation

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Appreciation Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Clearbridge Appreciation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Heartland Value and Clearbridge Appreciation

The main advantage of trading using opposite Heartland Value and Clearbridge Appreciation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value 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 Heartland Value Plus 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.