Correlation Between Clearbridge Energy and Conestoga Micro

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

Diversification Opportunities for Clearbridge Energy and Conestoga Micro

0.77

Correlation Coefficient

Clearbridge Energy  Conestoga Micro

Poor diversification

The 3 months correlation between Clearbridge and Conestoga is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and Conestoga Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Micro Cap 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 Conestoga Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Micro Cap has no effect on the direction of Clearbridge Energy i.e., Clearbridge Energy and Conestoga Micro go up and down completely randomly.

Pair Corralation between Clearbridge Energy and Conestoga Micro

Assuming the 90 days horizon Clearbridge Energy Mlp is expected to generate 0.88 times more return on investment than Conestoga Micro. However, Clearbridge Energy Mlp is 1.14 times less risky than Conestoga Micro. It trades about 0.57 of its potential returns per unit of risk. Conestoga Micro Cap is currently generating about 0.03 per unit of risk. If you would invest  4,975  in Clearbridge Energy Mlp on October 21, 2024 and sell it today you would earn a total of  624.00  from holding Clearbridge Energy Mlp or generate 12.54% return on investment over 90 days.

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

Clearbridge Energy Mlp  vs.  Conestoga Micro Cap

Clearbridge Energy Mlp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 14 (%) 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.

Conestoga Micro Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Conestoga Micro Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Conestoga Micro may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Clearbridge Energy and Conestoga Micro

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

The idea behind Clearbridge Energy Mlp and Conestoga Micro Cap 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.