Correlation Between Clearbridge Small and Mutual Quest

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

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

Diversification Opportunities for Clearbridge Small and Mutual Quest

0.94

Correlation Coefficient

Clearbridge Small  Mutual Quest

Almost no diversification

The 3 months correlation between Clearbridge and Mutual is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Small Cap and Mutual Quest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mutual Quest and Clearbridge Small 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 Small Cap are associated (or correlated) with Mutual Quest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mutual Quest has no effect on the direction of Clearbridge Small i.e., Clearbridge Small and Mutual Quest go up and down completely randomly.

Pair Corralation between Clearbridge Small and Mutual Quest

Assuming the 90 days horizon Clearbridge Small Cap is expected to generate 1.98 times more return on investment than Mutual Quest. However, Clearbridge Small is 1.98 times more volatile than Mutual Quest. It trades about 0.13 of its potential returns per unit of risk. Mutual Quest is currently generating about 0.16 per unit of risk. If you would invest  3,200  in Clearbridge Small Cap on May 4, 2025 and sell it today you would earn a total of  289.00  from holding Clearbridge Small Cap or generate 9.03% return on investment over 90 days.

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

Clearbridge Small Cap  vs.  Mutual Quest

Clearbridge Small Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Clearbridge Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Mutual Quest

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mutual Quest are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mutual Quest 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 Small and Mutual Quest

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

The idea behind Clearbridge Small Cap and Mutual Quest 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.