Correlation Between Clearbridge Select and 2Seventy Bio

Can any of the company-specific risk be diversified away by investing in both Clearbridge Select and 2Seventy Bio 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 Select and 2Seventy Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clearbridge Select Fund and 2Seventy Bio, you can compare the effects of market volatilities on Clearbridge Select and 2Seventy Bio 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 Select with a short position of 2Seventy Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Select and 2Seventy Bio.

Diversification Opportunities for Clearbridge Select and 2Seventy Bio

0.28

Correlation Coefficient

Clearbridge Select  2Seventy Bio

Modest diversification

The 3 months correlation between Clearbridge and 2Seventy is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Select Fund and 2Seventy Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2Seventy Bio and Clearbridge Select 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 Select Fund are associated (or correlated) with 2Seventy Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2Seventy Bio has no effect on the direction of Clearbridge Select i.e., Clearbridge Select and 2Seventy Bio go up and down completely randomly.

Pair Corralation between Clearbridge Select and 2Seventy Bio

Assuming the 90 days horizon Clearbridge Select Fund is expected to under-perform the 2Seventy Bio. But the mutual fund apears to be less risky and, when comparing its historical volatility, Clearbridge Select Fund is 5.76 times less risky than 2Seventy Bio. The mutual fund trades about -0.04 of its potential returns per unit of risk. The 2Seventy Bio is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  525.00  in 2Seventy Bio on February 2, 2024 and sell it today you would lose (32.00) from holding 2Seventy Bio or give up 6.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Clearbridge Select Fund  vs.  2Seventy Bio

Clearbridge Select

Risk-Adjusted Performance

0 of 100

Very Weak

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

2Seventy Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 2Seventy Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, 2Seventy Bio is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Clearbridge Select and 2Seventy Bio

The main advantage of trading using opposite Clearbridge Select and 2Seventy Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Select position performs unexpectedly, 2Seventy Bio 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 2Seventy Bio will offset losses from the drop in 2Seventy Bio's long position.

The idea behind Clearbridge Select Fund and 2Seventy Bio 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.