Correlation Between ClearBridge Dividend and VictoryShares

Can any of the company-specific risk be diversified away by investing in both ClearBridge Dividend and VictoryShares 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 Dividend and VictoryShares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ClearBridge Dividend Strategy and VictoryShares, you can compare the effects of market volatilities on ClearBridge Dividend and VictoryShares 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 Dividend with a short position of VictoryShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearBridge Dividend and VictoryShares.

Diversification Opportunities for ClearBridge Dividend and VictoryShares

0.09

Correlation Coefficient

ClearBridge Dividend  VictoryShares

Significant diversification

The 3 months correlation between ClearBridge and VictoryShares is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ClearBridge Dividend Strategy and VictoryShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares and ClearBridge Dividend 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 Dividend Strategy are associated (or correlated) with VictoryShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares has no effect on the direction of ClearBridge Dividend i.e., ClearBridge Dividend and VictoryShares go up and down completely randomly.

Pair Corralation between ClearBridge Dividend and VictoryShares

Given the investment horizon of 90 days ClearBridge Dividend is expected to generate 277.48 times less return on investment than VictoryShares. But when comparing it to its historical volatility, ClearBridge Dividend Strategy is 200.8 times less risky than VictoryShares. It trades about 0.09 of its potential returns per unit of risk. VictoryShares is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  61.00  in VictoryShares on October 11, 2024 and sell it today you would earn a total of  149.00  from holding VictoryShares or generate 244.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.14%
Values	Daily Returns

ClearBridge Dividend Strategy  vs.  VictoryShares

ClearBridge Dividend

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ClearBridge Dividend Strategy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, ClearBridge Dividend is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

VictoryShares

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days VictoryShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile forward indicators, VictoryShares showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ClearBridge Dividend and VictoryShares

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

The idea behind ClearBridge Dividend Strategy and VictoryShares 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.