Correlation Between ClearBridge Sustainable and SPDR SP

Can any of the company-specific risk be diversified away by investing in both ClearBridge Sustainable and SPDR SP 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 Sustainable and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ClearBridge Sustainable Infrastructure and SPDR SP Kensho, you can compare the effects of market volatilities on ClearBridge Sustainable and SPDR SP 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 Sustainable with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearBridge Sustainable and SPDR SP.

Diversification Opportunities for ClearBridge Sustainable and SPDR SP

0.09

Correlation Coefficient

ClearBridge Sustainable  SPDR SP

Significant diversification

The 3 months correlation between ClearBridge and SPDR is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ClearBridge Sustainable Infras and SPDR SP Kensho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Kensho and ClearBridge Sustainable 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 Sustainable Infrastructure are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Kensho has no effect on the direction of ClearBridge Sustainable i.e., ClearBridge Sustainable and SPDR SP go up and down completely randomly.

Pair Corralation between ClearBridge Sustainable and SPDR SP

Given the investment horizon of 90 days ClearBridge Sustainable Infrastructure is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, ClearBridge Sustainable Infrastructure is 1.27 times less risky than SPDR SP. The etf trades about -0.16 of its potential returns per unit of risk. The SPDR SP Kensho is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,555  in SPDR SP Kensho on October 7, 2024 and sell it today you would lose (62.00) from holding SPDR SP Kensho or give up 1.74% of portfolio value over 90 days.

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

ClearBridge Sustainable Infras  vs.  SPDR SP Kensho

ClearBridge Sustainable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ClearBridge Sustainable Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Etf's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

SPDR SP Kensho

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP Kensho has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, SPDR SP is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ClearBridge Sustainable and SPDR SP

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

The idea behind ClearBridge Sustainable Infrastructure and SPDR SP Kensho 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.