Correlation Between Clearbridge Dividend and Zacks Dividend

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

Diversification Opportunities for Clearbridge Dividend and Zacks Dividend

0.88

Correlation Coefficient

Clearbridge Dividend  Zacks Dividend

Very poor diversification

The 3 months correlation between Clearbridge and Zacks is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Dividend Strategy and Zacks Dividend Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zacks Dividend 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 Zacks Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zacks Dividend has no effect on the direction of Clearbridge Dividend i.e., Clearbridge Dividend and Zacks Dividend go up and down completely randomly.

Pair Corralation between Clearbridge Dividend and Zacks Dividend

Assuming the 90 days horizon Clearbridge Dividend Strategy is expected to under-perform the Zacks Dividend. In addition to that, Clearbridge Dividend is 1.46 times more volatile than Zacks Dividend Fund. It trades about -0.29 of its total potential returns per unit of risk. Zacks Dividend Fund is currently generating about -0.28 per unit of volatility. If you would invest  2,700  in Zacks Dividend Fund on October 11, 2024 and sell it today you would lose (157.00) from holding Zacks Dividend Fund or give up 5.81% of portfolio value over 90 days.

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

Clearbridge Dividend Strategy  vs.  Zacks Dividend Fund

Clearbridge Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clearbridge Dividend Strategy 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.

Zacks Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zacks Dividend Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Zacks Dividend 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 Zacks Dividend

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

The idea behind Clearbridge Dividend Strategy and Zacks Dividend Fund 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.