Correlation Between Clearbridge Appreciation and Nuveen Small

Can any of the company-specific risk be diversified away by investing in both Clearbridge Appreciation and Nuveen Small 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 Nuveen Small 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 Nuveen Small Cap, you can compare the effects of market volatilities on Clearbridge Appreciation and Nuveen Small 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 Nuveen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Appreciation and Nuveen Small.

Diversification Opportunities for Clearbridge Appreciation and Nuveen Small

0.94

Correlation Coefficient

Clearbridge Appreciation  Nuveen Small

Almost no diversification

The 3 months correlation between Clearbridge and Nuveen is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Appreciation Fund and Nuveen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Small Cap 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 Nuveen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Small Cap has no effect on the direction of Clearbridge Appreciation i.e., Clearbridge Appreciation and Nuveen Small go up and down completely randomly.

Pair Corralation between Clearbridge Appreciation and Nuveen Small

Assuming the 90 days horizon Clearbridge Appreciation Fund is expected to under-perform the Nuveen Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Clearbridge Appreciation Fund is 1.14 times less risky than Nuveen Small. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Nuveen Small Cap is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,279  in Nuveen Small Cap on December 28, 2024 and sell it today you would lose (127.00) from holding Nuveen Small Cap or give up 3.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Clearbridge Appreciation Fund  vs.  Nuveen Small Cap

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.

Nuveen Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen Small 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 Nuveen Small

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

The idea behind Clearbridge Appreciation Fund and Nuveen Small Cap 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.