Correlation Between Clearbridge Appreciation and Carillon Scout

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

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

Diversification Opportunities for Clearbridge Appreciation and Carillon Scout

0.7

Correlation Coefficient

Clearbridge Appreciation  Carillon Scout

Poor diversification

The 3 months correlation between Clearbridge and Carillon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Appreciation Fund and Carillon Scout Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Scout Mid and Clearbridge Appreciation 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 Appreciation Fund are associated (or correlated) with Carillon Scout. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Scout Mid has no effect on the direction of Clearbridge Appreciation i.e., Clearbridge Appreciation and Carillon Scout go up and down completely randomly.

Pair Corralation between Clearbridge Appreciation and Carillon Scout

Assuming the 90 days horizon Clearbridge Appreciation Fund is expected to under-perform the Carillon Scout. But the mutual fund apears to be less risky and, when comparing its historical volatility, Clearbridge Appreciation Fund is 1.18 times less risky than Carillon Scout. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Carillon Scout Mid is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,316  in Carillon Scout Mid on December 29, 2024 and sell it today you would lose (78.00) from holding Carillon Scout Mid or give up 3.37% of portfolio value over 90 days.

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

Clearbridge Appreciation Fund  vs.  Carillon Scout Mid

Clearbridge Appreciation

Risk-Adjusted Performance

Very Weak

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

Carillon Scout Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carillon Scout Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Carillon Scout 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 Appreciation and Carillon Scout

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

The idea behind Clearbridge Appreciation Fund and Carillon Scout Mid 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.