Correlation Between Clearbridge Large and Jpmorgan Investor

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

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

Diversification Opportunities for Clearbridge Large and Jpmorgan Investor

0.76

Correlation Coefficient

Clearbridge Large  Jpmorgan Investor

Poor diversification

The 3 months correlation between Clearbridge and Jpmorgan is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Large Cap and Jpmorgan Investor Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Investor Growth and Clearbridge Large 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 Large Cap are associated (or correlated) with Jpmorgan Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Investor Growth has no effect on the direction of Clearbridge Large i.e., Clearbridge Large and Jpmorgan Investor go up and down completely randomly.

Pair Corralation between Clearbridge Large and Jpmorgan Investor

Assuming the 90 days horizon Clearbridge Large Cap is expected to under-perform the Jpmorgan Investor. In addition to that, Clearbridge Large is 1.29 times more volatile than Jpmorgan Investor Growth. It trades about -0.15 of its total potential returns per unit of risk. Jpmorgan Investor Growth is currently generating about 0.12 per unit of volatility. If you would invest  1,945  in Jpmorgan Investor Growth on September 15, 2024 and sell it today you would earn a total of  18.00  from holding Jpmorgan Investor Growth or generate 0.93% return on investment over 90 days.

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

Clearbridge Large Cap  vs.  Jpmorgan Investor Growth

Clearbridge Large Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Large Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Clearbridge Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Investor Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Investor Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Jpmorgan Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Clearbridge Large and Jpmorgan Investor

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

The idea behind Clearbridge Large Cap and Jpmorgan Investor 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.