Correlation Between Clearbridge Energy and Alps/alerian Energy

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

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

Diversification Opportunities for Clearbridge Energy and Alps/alerian Energy

0.98

Correlation Coefficient

Clearbridge Energy  Alps/alerian Energy

Almost no diversification

The 3 months correlation between Clearbridge and ALPS/ALERIAN is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and Alpsalerian Energy Infrastruct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alps/alerian Energy and Clearbridge Energy 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 Energy Mlp are associated (or correlated) with Alps/alerian Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alps/alerian Energy has no effect on the direction of Clearbridge Energy i.e., Clearbridge Energy and Alps/alerian Energy go up and down completely randomly.

Pair Corralation between Clearbridge Energy and Alps/alerian Energy

Assuming the 90 days horizon Clearbridge Energy Mlp is expected to generate 1.12 times more return on investment than Alps/alerian Energy. However, Clearbridge Energy is 1.12 times more volatile than Alpsalerian Energy Infrastructure. It trades about 0.26 of its potential returns per unit of risk. Alpsalerian Energy Infrastructure is currently generating about 0.29 per unit of risk. If you would invest  4,759  in Clearbridge Energy Mlp on September 3, 2024 and sell it today you would earn a total of  823.00  from holding Clearbridge Energy Mlp or generate 17.29% return on investment over 90 days.

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

Clearbridge Energy Mlp  vs.  Alpsalerian Energy Infrastruct

Clearbridge Energy Mlp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Clearbridge Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Alps/alerian Energy

Risk-Adjusted Performance

22 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Alpsalerian Energy Infrastructure are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Alps/alerian Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clearbridge Energy and Alps/alerian Energy

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

The idea behind Clearbridge Energy Mlp and Alpsalerian Energy Infrastructure 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..