Correlation Between Clearbridge Appreciation and Jpmorgan Investor

Can any of the company-specific risk be diversified away by investing in both Clearbridge Appreciation 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 Appreciation 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 Appreciation Fund and Jpmorgan Investor Balanced, you can compare the effects of market volatilities on Clearbridge Appreciation 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 Appreciation with a short position of Jpmorgan Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Appreciation and Jpmorgan Investor.

Diversification Opportunities for Clearbridge Appreciation and Jpmorgan Investor

0.8

Correlation Coefficient

Clearbridge Appreciation  Jpmorgan Investor

Very poor diversification

The 3 months correlation between Clearbridge and Jpmorgan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Appreciation Fund and Jpmorgan Investor Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Investor and Clearbridge Appreciation 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 Appreciation Fund 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 has no effect on the direction of Clearbridge Appreciation i.e., Clearbridge Appreciation and Jpmorgan Investor go up and down completely randomly.

Pair Corralation between Clearbridge Appreciation and Jpmorgan Investor

Assuming the 90 days horizon Clearbridge Appreciation Fund is expected to under-perform the Jpmorgan Investor. In addition to that, Clearbridge Appreciation is 2.66 times more volatile than Jpmorgan Investor Balanced. It trades about -0.07 of its total potential returns per unit of risk. Jpmorgan Investor Balanced is currently generating about -0.12 per unit of volatility. If you would invest  1,617  in Jpmorgan Investor Balanced on September 21, 2024 and sell it today you would lose (65.00) from holding Jpmorgan Investor Balanced or give up 4.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Clearbridge Appreciation Fund  vs.  Jpmorgan Investor Balanced

Clearbridge Appreciation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jpmorgan Investor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Investor Balanced has generated negative risk-adjusted returns adding no value to fund investors. 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 Appreciation and Jpmorgan Investor

The main advantage of trading using opposite Clearbridge Appreciation and Jpmorgan Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Appreciation 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 Appreciation Fund and Jpmorgan Investor Balanced 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.