Correlation Between Global Equity and Clearbridge Energy

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

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

Diversification Opportunities for Global Equity and Clearbridge Energy

-0.15

Correlation Coefficient

Global Equity  Clearbridge Energy

Good diversification

The 3 months correlation between Global and Clearbridge is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Global Equity Fund 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 Global Equity 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 Global Equity Fund 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 Global Equity i.e., Global Equity and Clearbridge Energy go up and down completely randomly.

Pair Corralation between Global Equity and Clearbridge Energy

Assuming the 90 days horizon Global Equity Fund is expected to under-perform the Clearbridge Energy. In addition to that, Global Equity is 1.28 times more volatile than Clearbridge Energy Mlp. It trades about -0.17 of its total potential returns per unit of risk. Clearbridge Energy Mlp is currently generating about 0.1 per unit of volatility. If you would invest  5,368  in Clearbridge Energy Mlp on October 21, 2024 and sell it today you would earn a total of  272.00  from holding Clearbridge Energy Mlp or generate 5.07% return on investment over 90 days.

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

Global Equity Fund  vs.  Clearbridge Energy Mlp

Global Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Equity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Clearbridge Energy Mlp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Clearbridge Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Equity and Clearbridge Energy

The main advantage of trading using opposite Global Equity and Clearbridge Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Equity 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 Global Equity Fund 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.