Correlation Between Clearbridge Dividend and Polen International

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

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

Diversification Opportunities for Clearbridge Dividend and Polen International

0.86

Correlation Coefficient

Clearbridge Dividend  Polen International

Very poor diversification

The 3 months correlation between CLEARBRIDGE and Polen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Dividend Strategy and Polen International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen International and Clearbridge Dividend 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 Dividend Strategy are associated (or correlated) with Polen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen International has no effect on the direction of Clearbridge Dividend i.e., Clearbridge Dividend and Polen International go up and down completely randomly.

Pair Corralation between Clearbridge Dividend and Polen International

Assuming the 90 days horizon Clearbridge Dividend is expected to generate 3.73 times less return on investment than Polen International. But when comparing it to its historical volatility, Clearbridge Dividend Strategy is 1.45 times less risky than Polen International. It trades about 0.02 of its potential returns per unit of risk. Polen International Growth is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,576  in Polen International Growth on December 22, 2024 and sell it today you would earn a total of  45.00  from holding Polen International Growth or generate 2.86% return on investment over 90 days.

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

Clearbridge Dividend Strategy  vs.  Polen International Growth

Clearbridge Dividend

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Dividend Strategy 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 Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Polen International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Polen International Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Polen International 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 Dividend and Polen International

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

The idea behind Clearbridge Dividend Strategy and Polen International 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.