Correlation Between Short Oil and Clearbridge Energy

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

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

Diversification Opportunities for Short Oil and Clearbridge Energy

-0.91

Correlation Coefficient

Short Oil  Clearbridge Energy

Pay attention - limited upside

The 3 months correlation between Short and Clearbridge is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Short Oil Gas and Clearbridge Energy Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Energy Mlp and Short Oil 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 Short Oil Gas are associated (or correlated) with Clearbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Energy Mlp has no effect on the direction of Short Oil i.e., Short Oil and Clearbridge Energy go up and down completely randomly.

Pair Corralation between Short Oil and Clearbridge Energy

Assuming the 90 days horizon Short Oil Gas is expected to under-perform the Clearbridge Energy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Short Oil Gas is 1.12 times less risky than Clearbridge Energy. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Clearbridge Energy Mlp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,115  in Clearbridge Energy Mlp on December 31, 2024 and sell it today you would earn a total of  419.00  from holding Clearbridge Energy Mlp or generate 8.19% return on investment over 90 days.

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

Short Oil Gas  vs.  Clearbridge Energy Mlp

Short Oil Gas

Risk-Adjusted Performance

Very Weak

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

Clearbridge Energy Mlp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Clearbridge Energy may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Short Oil and Clearbridge Energy

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

The idea behind Short Oil Gas and Clearbridge Energy Mlp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.