Correlation Between Clearbridge Large and Oberweis Emerging

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

By analyzing existing cross correlation between Clearbridge Large Cap and Oberweis Emerging Growth, you can compare the effects of market volatilities on Clearbridge Large and Oberweis Emerging 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 Large with a short position of Oberweis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Large and Oberweis Emerging.

Diversification Opportunities for Clearbridge Large and Oberweis Emerging

0.92

Correlation Coefficient

Clearbridge Large  Oberweis Emerging

Almost no diversification

The 3 months correlation between Clearbridge and Oberweis is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Large Cap and Oberweis Emerging Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Emerging Growth and Clearbridge Large 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 Large Cap are associated (or correlated) with Oberweis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Emerging Growth has no effect on the direction of Clearbridge Large i.e., Clearbridge Large and Oberweis Emerging go up and down completely randomly.

Pair Corralation between Clearbridge Large and Oberweis Emerging

Assuming the 90 days horizon Clearbridge Large Cap is expected to under-perform the Oberweis Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Clearbridge Large Cap is 1.21 times less risky than Oberweis Emerging. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Oberweis Emerging Growth is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,992  in Oberweis Emerging Growth on December 22, 2024 and sell it today you would lose (225.00) from holding Oberweis Emerging Growth or give up 7.52% of portfolio value over 90 days.

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

Clearbridge Large Cap  vs.  Oberweis Emerging Growth

Clearbridge Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearbridge Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Oberweis Emerging Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oberweis Emerging Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Clearbridge Large and Oberweis Emerging

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

The idea behind Clearbridge Large Cap and Oberweis Emerging Growth 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.