Correlation Between Forum Real and Clearbridge International

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

By analyzing existing cross correlation between Forum Real Estate and Clearbridge International Value, you can compare the effects of market volatilities on Forum Real and Clearbridge International 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 Forum Real with a short position of Clearbridge International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Real and Clearbridge International.

Diversification Opportunities for Forum Real and Clearbridge International

-0.82

Correlation Coefficient

Forum Real  Clearbridge International

Pay attention - limited upside

The 3 months correlation between Forum and Clearbridge is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Forum Real Estate and Clearbridge International Valu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge International and Forum Real 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 Forum Real Estate are associated (or correlated) with Clearbridge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge International has no effect on the direction of Forum Real i.e., Forum Real and Clearbridge International go up and down completely randomly.

Pair Corralation between Forum Real and Clearbridge International

Assuming the 90 days horizon Forum Real Estate is expected to generate 0.12 times more return on investment than Clearbridge International. However, Forum Real Estate is 8.25 times less risky than Clearbridge International. It trades about 0.49 of its potential returns per unit of risk. Clearbridge International Value is currently generating about 0.04 per unit of risk. If you would invest  828.00  in Forum Real Estate on September 12, 2024 and sell it today you would earn a total of  141.00  from holding Forum Real Estate or generate 17.03% return on investment over 90 days.

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

Forum Real Estate  vs.  Clearbridge International Valu

Forum Real Estate

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Real Estate are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Forum Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clearbridge International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clearbridge International Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Clearbridge International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Forum Real and Clearbridge International

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

The idea behind Forum Real Estate and Clearbridge International Value 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.