Correlation Between Clearbridge Value and Causeway International

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

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

Diversification Opportunities for Clearbridge Value and Causeway International

0.09

Correlation Coefficient

Clearbridge Value  Causeway International

Significant diversification

The 3 months correlation between Clearbridge and Causeway is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Value Trust and Causeway International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway International and Clearbridge Value 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 Value Trust are associated (or correlated) with Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of Clearbridge Value i.e., Clearbridge Value and Causeway International go up and down completely randomly.

Pair Corralation between Clearbridge Value and Causeway International

Assuming the 90 days horizon Clearbridge Value Trust is expected to under-perform the Causeway International. In addition to that, Clearbridge Value is 1.01 times more volatile than Causeway International Value. It trades about -0.35 of its total potential returns per unit of risk. Causeway International Value is currently generating about -0.23 per unit of volatility. If you would invest  2,031  in Causeway International Value on September 25, 2024 and sell it today you would lose (186.00) from holding Causeway International Value or give up 9.16% of portfolio value over 90 days.

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

Clearbridge Value Trust  vs.  Causeway International Value

Clearbridge Value Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Causeway International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Causeway International Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Clearbridge Value and Causeway International

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

The idea behind Clearbridge Value Trust and Causeway International Value 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.