Correlation Between Alphabet and Clearbridge Variable

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

By analyzing existing cross correlation between Alphabet Inc Class C and Clearbridge Variable Appreciation, you can compare the effects of market volatilities on Alphabet and Clearbridge Variable 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 Alphabet with a short position of Clearbridge Variable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Clearbridge Variable.

Diversification Opportunities for Alphabet and Clearbridge Variable

0.23

Correlation Coefficient

Alphabet  Clearbridge Variable

Modest diversification

The 3 months correlation between Alphabet and Clearbridge is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Clearbridge Variable Appreciat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Variable and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Clearbridge Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Variable has no effect on the direction of Alphabet i.e., Alphabet and Clearbridge Variable go up and down completely randomly.

Pair Corralation between Alphabet and Clearbridge Variable

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.27 times more return on investment than Clearbridge Variable. However, Alphabet is 1.27 times more volatile than Clearbridge Variable Appreciation. It trades about 0.2 of its potential returns per unit of risk. Clearbridge Variable Appreciation is currently generating about -0.04 per unit of risk. If you would invest  15,819  in Alphabet Inc Class C on September 13, 2024 and sell it today you would earn a total of  3,544  from holding Alphabet Inc Class C or generate 22.4% return on investment over 90 days.

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

Alphabet Inc Class C  vs.  Clearbridge Variable Appreciat

Alphabet Class C

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Clearbridge Variable

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alphabet and Clearbridge Variable

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

The idea behind Alphabet Inc Class C and Clearbridge Variable Appreciation 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.