Correlation Between Alphabet and Clearbridge Aggressive

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

Diversification Opportunities for Alphabet and Clearbridge Aggressive

0.33

Correlation Coefficient

Alphabet  Clearbridge Aggressive

Weak diversification

The 3 months correlation between Alphabet and Clearbridge is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Clearbridge Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Aggressive 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 Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Aggressive has no effect on the direction of Alphabet i.e., Alphabet and Clearbridge Aggressive go up and down completely randomly.

Pair Corralation between Alphabet and Clearbridge Aggressive

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.58 times more return on investment than Clearbridge Aggressive. However, Alphabet Inc Class C is 1.71 times less risky than Clearbridge Aggressive. It trades about 0.22 of its potential returns per unit of risk. Clearbridge Aggressive Growth is currently generating about -0.14 per unit of risk. If you would invest  17,369  in Alphabet Inc Class C on September 16, 2024 and sell it today you would earn a total of  1,769  from holding Alphabet Inc Class C or generate 10.18% 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 Aggressive Growth

Alphabet Class C

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Clearbridge Aggressive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clearbridge Aggressive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Clearbridge Aggressive 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 Aggressive

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

The idea behind Alphabet Inc Class C and Clearbridge Aggressive Growth 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.