Correlation Between Clearbridge Energy and Chartwell Short

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

Diversification Opportunities for Clearbridge Energy and Chartwell Short

0.77

Correlation Coefficient

Clearbridge Energy  Chartwell Short

Poor diversification

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

Pair Corralation between Clearbridge Energy and Chartwell Short

Assuming the 90 days horizon Clearbridge Energy Mlp is expected to generate 10.06 times more return on investment than Chartwell Short. However, Clearbridge Energy is 10.06 times more volatile than Chartwell Short Duration. It trades about 0.22 of its potential returns per unit of risk. Chartwell Short Duration is currently generating about 0.11 per unit of risk. If you would invest  4,738  in Clearbridge Energy Mlp on September 5, 2024 and sell it today you would earn a total of  709.00  from holding Clearbridge Energy Mlp or generate 14.96% 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.  Chartwell Short Duration

Clearbridge Energy Mlp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 17 (%) 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.

Chartwell Short Duration

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Short Duration are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Chartwell Short 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 Energy and Chartwell Short

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

The idea behind Clearbridge Energy Mlp and Chartwell Short Duration 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.