Correlation Between American Beacon and Legg Mason
Can any of the company-specific risk be diversified away by investing in both American Beacon 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 American Beacon and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon The and Legg Mason Global, you can compare the effects of market volatilities on American Beacon 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 American Beacon with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Legg Mason.
Diversification Opportunities for American Beacon and Legg Mason
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Legg is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon The and Legg Mason Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Global and American Beacon 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 American Beacon The 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 Global has no effect on the direction of American Beacon i.e., American Beacon and Legg Mason go up and down completely randomly.
Pair Corralation between American Beacon and Legg Mason
Assuming the 90 days horizon American Beacon The is expected to generate 2.75 times more return on investment than Legg Mason. However, American Beacon is 2.75 times more volatile than Legg Mason Global. It trades about 0.14 of its potential returns per unit of risk. Legg Mason Global is currently generating about 0.11 per unit of risk. If you would invest 2,170 in American Beacon The on September 13, 2024 and sell it today you would earn a total of 236.00 from holding American Beacon The or generate 10.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Beacon The vs. Legg Mason Global
Performance |
Timeline |
American Beacon |
Legg Mason Global |
American Beacon and Legg Mason Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Beacon and Legg Mason
The main advantage of trading using opposite American Beacon and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon 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.American Beacon vs. Ambrus Core Bond | American Beacon vs. Dreyfusstandish Global Fixed | American Beacon vs. Ab Global Bond | American Beacon vs. California Bond Fund |
Legg Mason vs. Calamos Global Equity | Legg Mason vs. Gmo Global Equity | Legg Mason vs. Qs Global Equity | Legg Mason vs. Touchstone International 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |