Correlation Between Clearbridge Dividend and Vanguard Tax

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

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

Diversification Opportunities for Clearbridge Dividend and Vanguard Tax

0.9

Correlation Coefficient

Clearbridge Dividend  Vanguard Tax

Almost no diversification

The 3 months correlation between Clearbridge and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Dividend Strategy and Vanguard Tax Managed Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Tax Managed and Clearbridge Dividend 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 Dividend Strategy are associated (or correlated) with Vanguard Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Tax Managed has no effect on the direction of Clearbridge Dividend i.e., Clearbridge Dividend and Vanguard Tax go up and down completely randomly.

Pair Corralation between Clearbridge Dividend and Vanguard Tax

Assuming the 90 days horizon Clearbridge Dividend is expected to generate 1.8 times less return on investment than Vanguard Tax. But when comparing it to its historical volatility, Clearbridge Dividend Strategy is 2.27 times less risky than Vanguard Tax. It trades about 0.12 of its potential returns per unit of risk. Vanguard Tax Managed Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  9,146  in Vanguard Tax Managed Small Cap on July 24, 2025 and sell it today you would earn a total of  641.00  from holding Vanguard Tax Managed Small Cap or generate 7.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Clearbridge Dividend Strategy  vs.  Vanguard Tax Managed Small Cap

Clearbridge Dividend

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Dividend Strategy are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Clearbridge Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Tax Managed

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Tax Managed Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Tax may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Clearbridge Dividend and Vanguard Tax

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

The idea behind Clearbridge Dividend Strategy and Vanguard Tax Managed Small Cap 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.