Correlation Between Merger Fund and Clearbridge Large

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

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

Diversification Opportunities for Merger Fund and Clearbridge Large

0.45

Correlation Coefficient

Merger Fund  Clearbridge Large

Very weak diversification

The 3 months correlation between Merger and Clearbridge is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding The Merger Fund and Clearbridge Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Large Cap and Merger Fund 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 The Merger Fund are associated (or correlated) with Clearbridge Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Large Cap has no effect on the direction of Merger Fund i.e., Merger Fund and Clearbridge Large go up and down completely randomly.

Pair Corralation between Merger Fund and Clearbridge Large

Assuming the 90 days horizon The Merger Fund is expected to generate 0.16 times more return on investment than Clearbridge Large. However, The Merger Fund is 6.41 times less risky than Clearbridge Large. It trades about 0.33 of its potential returns per unit of risk. Clearbridge Large Cap is currently generating about 0.02 per unit of risk. If you would invest  1,790  in The Merger Fund on August 26, 2025 and sell it today you would earn a total of  34.00  from holding The Merger Fund or generate 1.9% return on investment over 90 days.

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

The Merger Fund  vs.  Clearbridge Large Cap

Merger Fund

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in The Merger Fund are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Merger Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clearbridge Large Cap

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Large Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Clearbridge Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Merger Fund and Clearbridge Large

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

The idea behind The Merger Fund and Clearbridge Large 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.