Correlation Between Clearbridge International and Clearbridge Aggressive

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

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

Diversification Opportunities for Clearbridge International and Clearbridge Aggressive

-0.41

Correlation Coefficient

Clearbridge International  Clearbridge Aggressive

Very good diversification

The 3 months correlation between Clearbridge and Clearbridge is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge International Valu and Clearbridge Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Aggressive and Clearbridge International 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 International Value are associated (or correlated) with Clearbridge Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Aggressive has no effect on the direction of Clearbridge International i.e., Clearbridge International and Clearbridge Aggressive go up and down completely randomly.

Pair Corralation between Clearbridge International and Clearbridge Aggressive

Assuming the 90 days horizon Clearbridge International Value is expected to generate 0.69 times more return on investment than Clearbridge Aggressive. However, Clearbridge International Value is 1.45 times less risky than Clearbridge Aggressive. It trades about 0.21 of its potential returns per unit of risk. Clearbridge Aggressive Growth is currently generating about -0.06 per unit of risk. If you would invest  1,025  in Clearbridge International Value on December 25, 2024 and sell it today you would earn a total of  127.00  from holding Clearbridge International Value or generate 12.39% return on investment over 90 days.

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

Clearbridge International Valu  vs.  Clearbridge Aggressive Growth

Clearbridge International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge International Value are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Clearbridge International showed solid returns over the last few months and may actually be approaching a breakup point.

Clearbridge Aggressive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearbridge Aggressive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Clearbridge Aggressive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Clearbridge International and Clearbridge Aggressive

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

The idea behind Clearbridge International Value and Clearbridge Aggressive Growth 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.