Correlation Between Ab Impact and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Ab Impact 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 Ab Impact and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Impact Municipal and Legg Mason Bw, you can compare the effects of market volatilities on Ab Impact 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 Ab Impact with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Impact and Legg Mason.
Diversification Opportunities for Ab Impact and Legg Mason
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ABIMX and Legg is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ab Impact Municipal and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Ab Impact 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 Ab Impact Municipal 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 Bw has no effect on the direction of Ab Impact i.e., Ab Impact and Legg Mason go up and down completely randomly.
Pair Corralation between Ab Impact and Legg Mason
Assuming the 90 days horizon Ab Impact Municipal is expected to generate 0.48 times more return on investment than Legg Mason. However, Ab Impact Municipal is 2.08 times less risky than Legg Mason. It trades about 0.09 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.0 per unit of risk. If you would invest 877.00 in Ab Impact Municipal on September 12, 2024 and sell it today you would earn a total of 122.00 from holding Ab Impact Municipal or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Impact Municipal vs. Legg Mason Bw
Performance |
| Timeline |
| Ab Impact Municipal |
| Legg Mason Bw |
Ab Impact and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Impact and Legg Mason
The main advantage of trading using opposite Ab Impact and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Impact 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.| Ab Impact vs. SCOR PK | Ab Impact vs. Morningstar Unconstrained Allocation | Ab Impact vs. Thrivent High Yield | Ab Impact vs. Via Renewables |
| Legg Mason vs. Ishares Municipal Bond | Legg Mason vs. Franklin High Yield | Legg Mason vs. Oklahoma Municipal Fund | Legg Mason vs. Ab Impact Municipal |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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