Correlation Between Clearbridge Energy and Blue Chip

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

Diversification Opportunities for Clearbridge Energy and Blue Chip

0.55

Correlation Coefficient

Clearbridge Energy  Blue Chip

Very weak diversification

The 3 months correlation between Clearbridge and Blue is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and Blue Chip Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Growth 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 Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Growth has no effect on the direction of Clearbridge Energy i.e., Clearbridge Energy and Blue Chip go up and down completely randomly.

Pair Corralation between Clearbridge Energy and Blue Chip

Assuming the 90 days horizon Clearbridge Energy Mlp is expected to generate 0.9 times more return on investment than Blue Chip. However, Clearbridge Energy Mlp is 1.11 times less risky than Blue Chip. It trades about 0.56 of its potential returns per unit of risk. Blue Chip Growth is currently generating about -0.04 per unit of risk. If you would invest  5,089  in Clearbridge Energy Mlp on October 22, 2024 and sell it today you would earn a total of  551.00  from holding Clearbridge Energy Mlp or generate 10.83% return on investment over 90 days.

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

Clearbridge Energy Mlp  vs.  Blue Chip Growth

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.

Blue Chip Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Chip Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Blue Chip 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 Blue Chip

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

The idea behind Clearbridge Energy Mlp and Blue Chip Growth 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.