Correlation Between Ab Global and Clearbridge Mid

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

By analyzing existing cross correlation between Ab Global Risk and Clearbridge Mid Cap, you can compare the effects of market volatilities on Ab Global and Clearbridge Mid 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 Ab Global with a short position of Clearbridge Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Clearbridge Mid.

Diversification Opportunities for Ab Global and Clearbridge Mid

0.3

Correlation Coefficient

Ab Global  Clearbridge Mid

Weak diversification

The 3 months correlation between CBSYX and Clearbridge is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Clearbridge Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Mid Cap and Ab Global 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 Ab Global Risk are associated (or correlated) with Clearbridge Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Mid Cap has no effect on the direction of Ab Global i.e., Ab Global and Clearbridge Mid go up and down completely randomly.

Pair Corralation between Ab Global and Clearbridge Mid

Assuming the 90 days horizon Ab Global is expected to generate 4.85 times less return on investment than Clearbridge Mid. But when comparing it to its historical volatility, Ab Global Risk is 2.15 times less risky than Clearbridge Mid. It trades about 0.11 of its potential returns per unit of risk. Clearbridge Mid Cap is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,297  in Clearbridge Mid Cap on September 4, 2024 and sell it today you would earn a total of  320.00  from holding Clearbridge Mid Cap or generate 13.93% return on investment over 90 days.

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

Ab Global Risk  vs.  Clearbridge Mid Cap

Ab Global Risk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Global Risk are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clearbridge Mid Cap

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Mid Cap are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Clearbridge Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ab Global and Clearbridge Mid

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

The idea behind Ab Global Risk and Clearbridge Mid Cap 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.