Correlation Between Avantis Us and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Avantis Us 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 Avantis Us and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis Large Cap and Legg Mason Partners, you can compare the effects of market volatilities on Avantis Us 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 Avantis Us with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Us and Legg Mason.
Diversification Opportunities for Avantis Us and Legg Mason
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Avantis and Legg is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Large Cap 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 Avantis Us 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 Avantis Large Cap 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 Avantis Us i.e., Avantis Us and Legg Mason go up and down completely randomly.
Pair Corralation between Avantis Us and Legg Mason
Assuming the 90 days horizon Avantis Large Cap is expected to generate 1.15 times more return on investment than Legg Mason. However, Avantis Us is 1.15 times more volatile than Legg Mason Partners. It trades about 0.12 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.11 per unit of risk. If you would invest 1,088 in Avantis Large Cap on September 4, 2024 and sell it today you would earn a total of 449.00 from holding Avantis Large Cap or generate 41.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Large Cap vs. Legg Mason Partners
Performance |
| Timeline |
| Avantis Large Cap |
| Legg Mason Partners |
Avantis Us and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Us and Legg Mason
The main advantage of trading using opposite Avantis Us and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Us 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.| Avantis Us vs. Avantis International Small | Avantis Us vs. American Century Etf | Avantis Us vs. Avantis International Equity | Avantis Us vs. American Century Etf |
| Legg Mason vs. Franklin Natural Resources | Legg Mason vs. Clearbridge Energy Mlp | Legg Mason vs. Tortoise Energy Independence | Legg Mason vs. Fidelity Advisor Energy |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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