Correlation Between Clearbridge International and Leader Short

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

Diversification Opportunities for Clearbridge International and Leader Short

0.79

Correlation Coefficient

Clearbridge International  Leader Short

Poor diversification

The 3 months correlation between Clearbridge and Leader is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge International Valu and Leader Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Short Term 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 Leader Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Short Term has no effect on the direction of Clearbridge International i.e., Clearbridge International and Leader Short go up and down completely randomly.

Pair Corralation between Clearbridge International and Leader Short

Assuming the 90 days horizon Clearbridge International Value is expected to generate 4.7 times more return on investment than Leader Short. However, Clearbridge International is 4.7 times more volatile than Leader Short Term Bond. It trades about 0.22 of its potential returns per unit of risk. Leader Short Term Bond is currently generating about 0.19 per unit of risk. If you would invest  1,010  in Clearbridge International Value on December 22, 2024 and sell it today you would earn a total of  139.00  from holding Clearbridge International Value or generate 13.76% return on investment over 90 days.

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

Clearbridge International Valu  vs.  Leader Short Term Bond

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 17 (%) 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.

Leader Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leader Short Term Bond are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Leader Short 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 Leader Short

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

The idea behind Clearbridge International Value and Leader Short Term Bond 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.