Correlation Between Clearbridge Energy and Pimco Energy

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

Diversification Opportunities for Clearbridge Energy and Pimco Energy

0.26

Correlation Coefficient

Clearbridge Energy  Pimco Energy

Modest diversification

The 3 months correlation between Clearbridge and Pimco is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and Pimco Energy Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Energy Tactical 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 Pimco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Energy Tactical has no effect on the direction of Clearbridge Energy i.e., Clearbridge Energy and Pimco Energy go up and down completely randomly.

Pair Corralation between Clearbridge Energy and Pimco Energy

Assuming the 90 days horizon Clearbridge Energy Mlp is expected to generate 0.4 times more return on investment than Pimco Energy. However, Clearbridge Energy Mlp is 2.5 times less risky than Pimco Energy. It trades about 0.12 of its potential returns per unit of risk. Pimco Energy Tactical is currently generating about -0.02 per unit of risk. If you would invest  5,089  in Clearbridge Energy Mlp on December 21, 2024 and sell it today you would earn a total of  496.00  from holding Clearbridge Energy Mlp or generate 9.75% return on investment over 90 days.

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

Clearbridge Energy Mlp  vs.  Pimco Energy Tactical

Clearbridge Energy Mlp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 9 (%) 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 April 2025.

Pimco Energy Tactical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pimco Energy Tactical has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Pimco Energy 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 Pimco Energy

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

The idea behind Clearbridge Energy Mlp and Pimco Energy Tactical 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.