Correlation Between Short Duration and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Short Duration 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 Short Duration and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Duration Plus and Legg Mason Partners, you can compare the effects of market volatilities on Short Duration 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 Short Duration with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Legg Mason.
Diversification Opportunities for Short Duration and Legg Mason
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Short and Legg is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Plus 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 Short Duration 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 Short Duration Plus 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 Short Duration i.e., Short Duration and Legg Mason go up and down completely randomly.
Pair Corralation between Short Duration and Legg Mason
If you would invest 100.00 in Legg Mason Partners on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Legg Mason Partners or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Short Duration Plus vs. Legg Mason Partners
Performance |
| Timeline |
| Short Duration Plus |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Legg Mason Partners |
Short Duration and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Duration and Legg Mason
The main advantage of trading using opposite Short Duration and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration 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.| Short Duration vs. Financials Ultrasector Profund | Short Duration vs. Angel Oak Financial | Short Duration vs. Davis Financial Fund | Short Duration vs. Davis Financial Fund |
| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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