Correlation Between Clearbridge Mid and Clearbridge Large

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

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

Diversification Opportunities for Clearbridge Mid and Clearbridge Large

0.93

Correlation Coefficient

Clearbridge Mid  Clearbridge Large

Almost no diversification

The 3 months correlation between Clearbridge and Clearbridge is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Mid Cap and Clearbridge Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Large Cap and Clearbridge Mid 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 Mid Cap are associated (or correlated) with Clearbridge Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Large Cap has no effect on the direction of Clearbridge Mid i.e., Clearbridge Mid and Clearbridge Large go up and down completely randomly.

Pair Corralation between Clearbridge Mid and Clearbridge Large

Assuming the 90 days horizon Clearbridge Mid is expected to generate 3.47 times less return on investment than Clearbridge Large. In addition to that, Clearbridge Mid is 1.25 times more volatile than Clearbridge Large Cap. It trades about 0.01 of its total potential returns per unit of risk. Clearbridge Large Cap is currently generating about 0.06 per unit of volatility. If you would invest  6,252  in Clearbridge Large Cap on September 14, 2024 and sell it today you would earn a total of  222.00  from holding Clearbridge Large Cap or generate 3.55% return on investment over 90 days.

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

Clearbridge Mid Cap  vs.  Clearbridge Large Cap

Clearbridge Mid Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Mid Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Clearbridge Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clearbridge Large Cap

Risk-Adjusted Performance

4 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Large Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Clearbridge Large 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 Mid and Clearbridge Large

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

The idea behind Clearbridge Mid Cap and Clearbridge Large 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.