Correlation Between Angel Oak and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Angel Oak 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 Angel Oak and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Angel Oak Flexible and Legg Mason Bw, you can compare the effects of market volatilities on Angel Oak 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 Angel Oak with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Legg Mason.
Diversification Opportunities for Angel Oak and Legg Mason
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Angel and Legg is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Flexible 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 Angel Oak 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 Angel Oak Flexible 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 Angel Oak i.e., Angel Oak and Legg Mason go up and down completely randomly.
Pair Corralation between Angel Oak and Legg Mason
Assuming the 90 days horizon Angel Oak is expected to generate 7.4 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Angel Oak Flexible is 3.64 times less risky than Legg Mason. It trades about 0.04 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,782 in Legg Mason Bw on September 3, 2024 and sell it today you would earn a total of 606.00 from holding Legg Mason Bw or generate 34.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 73.74% |
| Values | Daily Returns |
Angel Oak Flexible vs. Legg Mason Bw
Performance |
| Timeline |
| Angel Oak Flexible |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Legg Mason Bw |
Angel Oak and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and Legg Mason
The main advantage of trading using opposite Angel Oak and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak 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.| Angel Oak vs. Lord Abbett Convertible | Angel Oak vs. Putnam Convertible Incm Gwth | Angel Oak vs. Advent Claymore Convertible | Angel Oak vs. Gabelli Convertible And |
| Legg Mason vs. Mutual Of America | Legg Mason vs. Victory Rs Partners | Legg Mason vs. Royce Opportunity Fund | Legg Mason vs. Hennessy Nerstone Mid |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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