Correlation Between ClearBridge Sustainable and SPDR Kensho

Can any of the company-specific risk be diversified away by investing in both ClearBridge Sustainable and SPDR Kensho 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 Kensho 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 Kensho Intelligent, you can compare the effects of market volatilities on ClearBridge Sustainable and SPDR Kensho 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 Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearBridge Sustainable and SPDR Kensho.

Diversification Opportunities for ClearBridge Sustainable and SPDR Kensho

-0.75

Correlation Coefficient

ClearBridge Sustainable  SPDR Kensho

Pay attention - limited upside

The 3 months correlation between ClearBridge and SPDR is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding ClearBridge Sustainable Infras and SPDR Kensho Intelligent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Intelligent 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 Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Intelligent has no effect on the direction of ClearBridge Sustainable i.e., ClearBridge Sustainable and SPDR Kensho go up and down completely randomly.

Pair Corralation between ClearBridge Sustainable and SPDR Kensho

Given the investment horizon of 90 days ClearBridge Sustainable Infrastructure is expected to under-perform the SPDR Kensho. But the etf apears to be less risky and, when comparing its historical volatility, ClearBridge Sustainable Infrastructure is 1.24 times less risky than SPDR Kensho. The etf trades about -0.19 of its potential returns per unit of risk. The SPDR Kensho Intelligent is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,348  in SPDR Kensho Intelligent on September 13, 2024 and sell it today you would earn a total of  361.00  from holding SPDR Kensho Intelligent or generate 10.78% return on investment over 90 days.

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

ClearBridge Sustainable Infras  vs.  SPDR Kensho Intelligent

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 weak 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 Kensho Intelligent

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho Intelligent are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, SPDR Kensho may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ClearBridge Sustainable and SPDR Kensho

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

The idea behind ClearBridge Sustainable Infrastructure and SPDR Kensho Intelligent 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.