Correlation Between Vanguard Strategic and Clearbridge Energy

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

By analyzing existing cross correlation between Vanguard Strategic Equity and Clearbridge Energy Mlp, you can compare the effects of market volatilities on Vanguard Strategic and Clearbridge Energy 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 Vanguard Strategic with a short position of Clearbridge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Strategic and Clearbridge Energy.

Diversification Opportunities for Vanguard Strategic and Clearbridge Energy

0.89

Correlation Coefficient

Vanguard Strategic  Clearbridge Energy

Very poor diversification

The 3 months correlation between Vanguard and Clearbridge is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Strategic Equity and Clearbridge Energy Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Energy Mlp and Vanguard Strategic 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 Vanguard Strategic Equity are associated (or correlated) with Clearbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Energy Mlp has no effect on the direction of Vanguard Strategic i.e., Vanguard Strategic and Clearbridge Energy go up and down completely randomly.

Pair Corralation between Vanguard Strategic and Clearbridge Energy

Assuming the 90 days horizon Vanguard Strategic is expected to generate 1.44 times less return on investment than Clearbridge Energy. In addition to that, Vanguard Strategic is 1.04 times more volatile than Clearbridge Energy Mlp. It trades about 0.16 of its total potential returns per unit of risk. Clearbridge Energy Mlp is currently generating about 0.24 per unit of volatility. If you would invest  4,751  in Clearbridge Energy Mlp on August 30, 2024 and sell it today you would earn a total of  739.00  from holding Clearbridge Energy Mlp or generate 15.55% return on investment over 90 days.

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

Vanguard Strategic Equity  vs.  Clearbridge Energy Mlp

Vanguard Strategic Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Strategic Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Strategic may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Clearbridge Energy Mlp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Clearbridge Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Strategic and Clearbridge Energy

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

The idea behind Vanguard Strategic Equity and Clearbridge Energy Mlp 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.