Correlation Between Clearbridge Energy and Virtus Dfa

Can any of the company-specific risk be diversified away by investing in both Clearbridge Energy and Virtus Dfa 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 Virtus Dfa 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 Virtus Dfa 2040, you can compare the effects of market volatilities on Clearbridge Energy and Virtus Dfa 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 Virtus Dfa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Energy and Virtus Dfa.

Diversification Opportunities for Clearbridge Energy and Virtus Dfa

0.22

Correlation Coefficient

Clearbridge Energy  Virtus Dfa

Modest diversification

The 3 months correlation between Clearbridge and Virtus is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and Virtus Dfa 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Dfa 2040 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 Virtus Dfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Dfa 2040 has no effect on the direction of Clearbridge Energy i.e., Clearbridge Energy and Virtus Dfa go up and down completely randomly.

Pair Corralation between Clearbridge Energy and Virtus Dfa

Assuming the 90 days horizon Clearbridge Energy Mlp is expected to generate 0.51 times more return on investment than Virtus Dfa. However, Clearbridge Energy Mlp is 1.95 times less risky than Virtus Dfa. It trades about -0.01 of its potential returns per unit of risk. Virtus Dfa 2040 is currently generating about -0.29 per unit of risk. If you would invest  5,251  in Clearbridge Energy Mlp on October 10, 2024 and sell it today you would lose (19.00) from holding Clearbridge Energy Mlp or give up 0.36% of portfolio value over 90 days.

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

Clearbridge Energy Mlp  vs.  Virtus Dfa 2040

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.

Virtus Dfa 2040

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Dfa 2040 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Virtus Dfa

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

The idea behind Clearbridge Energy Mlp and Virtus Dfa 2040 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.