Correlation Between Clearbridge Small and Carillon Scout

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

Diversification Opportunities for Clearbridge Small and Carillon Scout

0.96

Correlation Coefficient

Clearbridge Small  Carillon Scout

Almost no diversification

The 3 months correlation between Clearbridge and Carillon is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Small Cap 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 Small 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 Small Cap 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 Small i.e., Clearbridge Small and Carillon Scout go up and down completely randomly.

Pair Corralation between Clearbridge Small and Carillon Scout

Assuming the 90 days horizon Clearbridge Small is expected to generate 1.82 times less return on investment than Carillon Scout. In addition to that, Clearbridge Small is 1.34 times more volatile than Carillon Scout Mid. It trades about 0.03 of its total potential returns per unit of risk. Carillon Scout Mid is currently generating about 0.08 per unit of volatility. If you would invest  1,989  in Carillon Scout Mid on September 4, 2024 and sell it today you would earn a total of  860.00  from holding Carillon Scout Mid or generate 43.24% return on investment over 90 days.

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

Clearbridge Small Cap  vs.  Carillon Scout Mid

Clearbridge Small Cap

Risk-Adjusted Performance

16 of 100

Solid

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

Carillon Scout Mid

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carillon Scout Mid are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Carillon Scout showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clearbridge Small and Carillon Scout

The main advantage of trading using opposite Clearbridge Small and Carillon Scout positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Small 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 Small Cap 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.