Correlation Between Clearbridge Energy and Catalystmillburn

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

Diversification Opportunities for Clearbridge Energy and Catalystmillburn

0.01

Correlation Coefficient

Clearbridge Energy  Catalystmillburn

Significant diversification

The 3 months correlation between Clearbridge and Catalystmillburn is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and Catalystmillburn Dynamic Commo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Dyn 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 Catalystmillburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Dyn has no effect on the direction of Clearbridge Energy i.e., Clearbridge Energy and Catalystmillburn go up and down completely randomly.

Pair Corralation between Clearbridge Energy and Catalystmillburn

Assuming the 90 days horizon Clearbridge Energy Mlp is expected to generate 1.55 times more return on investment than Catalystmillburn. However, Clearbridge Energy is 1.55 times more volatile than Catalystmillburn Dynamic Commodity. It trades about 0.07 of its potential returns per unit of risk. Catalystmillburn Dynamic Commodity is currently generating about -0.03 per unit of risk. If you would invest  3,498  in Clearbridge Energy Mlp on October 10, 2024 and sell it today you would earn a total of  1,715  from holding Clearbridge Energy Mlp or generate 49.03% return on investment over 90 days.

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

Clearbridge Energy Mlp  vs.  Catalystmillburn Dynamic Commo

Clearbridge Energy Mlp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Clearbridge Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Catalystmillburn Dyn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalystmillburn Dynamic Commodity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Clearbridge Energy and Catalystmillburn

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

The idea behind Clearbridge Energy Mlp and Catalystmillburn Dynamic Commodity 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.

Check out your portfolio center.

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 Correlations module to find global opportunities by holding instruments from different markets.