Correlation Between Invesco Growth and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Invesco Growth and Legg Mason 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 Invesco Growth and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Growth Allocation and Legg Mason Partners, you can compare the effects of market volatilities on Invesco Growth and Legg Mason 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 Invesco Growth with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Growth and Legg Mason.
Diversification Opportunities for Invesco Growth and Legg Mason
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and Legg is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Growth Allocation and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Invesco Growth 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 Invesco Growth Allocation are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Partners has no effect on the direction of Invesco Growth i.e., Invesco Growth and Legg Mason go up and down completely randomly.
Pair Corralation between Invesco Growth and Legg Mason
Assuming the 90 days horizon Invesco Growth Allocation is expected to generate 3.65 times more return on investment than Legg Mason. However, Invesco Growth is 3.65 times more volatile than Legg Mason Partners. It trades about 0.09 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.26 per unit of risk. If you would invest 1,502 in Invesco Growth Allocation on September 3, 2024 and sell it today you would earn a total of 111.00 from holding Invesco Growth Allocation or generate 7.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Growth Allocation vs. Legg Mason Partners
Performance |
| Timeline |
| Invesco Growth Allocation |
| Legg Mason Partners |
Invesco Growth and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Growth and Legg Mason
The main advantage of trading using opposite Invesco Growth and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Growth position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Invesco Growth vs. Ashmore Emerging Markets | Invesco Growth vs. Wilmington Funds | Invesco Growth vs. Lord Abbett Emerging | Invesco Growth vs. Matson Money Equity |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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