Correlation Between Western Asset and Clearbridge Aggressive

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

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

Diversification Opportunities for Western Asset and Clearbridge Aggressive

-0.44

Correlation Coefficient

Western Asset  Clearbridge Aggressive

Very good diversification

The 3 months correlation between Western and Clearbridge is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Total and Clearbridge Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Aggressive and Western Asset 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 Western Asset Total are associated (or correlated) with Clearbridge Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Aggressive has no effect on the direction of Western Asset i.e., Western Asset and Clearbridge Aggressive go up and down completely randomly.

Pair Corralation between Western Asset and Clearbridge Aggressive

Assuming the 90 days horizon Western Asset Total is expected to generate 0.11 times more return on investment than Clearbridge Aggressive. However, Western Asset Total is 8.72 times less risky than Clearbridge Aggressive. It trades about 0.31 of its potential returns per unit of risk. Clearbridge Aggressive Growth is currently generating about -0.07 per unit of risk. If you would invest  892.00  in Western Asset Total on December 22, 2024 and sell it today you would earn a total of  27.00  from holding Western Asset Total or generate 3.03% return on investment over 90 days.

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

Western Asset Total  vs.  Clearbridge Aggressive Growth

Western Asset Total

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Total are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Western Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clearbridge Aggressive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearbridge Aggressive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Clearbridge Aggressive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Western Asset and Clearbridge Aggressive

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

The idea behind Western Asset Total and Clearbridge Aggressive 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.