Correlation Between Clearbridge Energy and Power Floating

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

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

Diversification Opportunities for Clearbridge Energy and Power Floating

0.78

Correlation Coefficient

Clearbridge Energy  Power Floating

Poor diversification

The 3 months correlation between Clearbridge and Power is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and Power Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Floating Rate and Clearbridge Energy 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 Energy Mlp are associated (or correlated) with Power Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Floating Rate has no effect on the direction of Clearbridge Energy i.e., Clearbridge Energy and Power Floating go up and down completely randomly.

Pair Corralation between Clearbridge Energy and Power Floating

Assuming the 90 days horizon Clearbridge Energy Mlp is expected to generate 17.54 times more return on investment than Power Floating. However, Clearbridge Energy is 17.54 times more volatile than Power Floating Rate. It trades about 0.12 of its potential returns per unit of risk. Power Floating Rate is currently generating about 0.26 per unit of risk. If you would invest  4,681  in Clearbridge Energy Mlp on September 26, 2024 and sell it today you would earn a total of  408.00  from holding Clearbridge Energy Mlp or generate 8.72% return on investment over 90 days.

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

Clearbridge Energy Mlp  vs.  Power Floating Rate

Clearbridge Energy Mlp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Clearbridge Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Power Floating Rate

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Power Floating Rate are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Power Floating 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 Energy and Power Floating

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

The idea behind Clearbridge Energy Mlp and Power Floating Rate 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.