Correlation Between Artisan Small and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Artisan Small 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 Artisan Small and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Artisan Small Cap and Legg Mason Bw, you can compare the effects of market volatilities on Artisan Small 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 Artisan Small with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Small and Legg Mason.
Diversification Opportunities for Artisan Small and Legg Mason
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Artisan and Legg is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap 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 Artisan Small 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 Artisan Small 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 Bw has no effect on the direction of Artisan Small i.e., Artisan Small and Legg Mason go up and down completely randomly.
Pair Corralation between Artisan Small and Legg Mason
Assuming the 90 days horizon Artisan Small is expected to generate 1.04 times less return on investment than Legg Mason. In addition to that, Artisan Small is 1.74 times more volatile than Legg Mason Bw. It trades about 0.04 of its total potential returns per unit of risk. Legg Mason Bw is currently generating about 0.07 per unit of volatility. If you would invest 1,787 in Legg Mason Bw on September 3, 2024 and sell it today you would earn a total of 555.00 from holding Legg Mason Bw or generate 31.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Artisan Small Cap vs. Legg Mason Bw
Performance |
| Timeline |
| Artisan Small Cap |
| Legg Mason Bw |
Artisan Small and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Artisan Small and Legg Mason
The main advantage of trading using opposite Artisan Small and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artisan Small 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.| Artisan Small vs. Vanguard Windsor Fund | Artisan Small vs. Americafirst Large Cap | Artisan Small vs. Transamerica Large Cap | Artisan Small vs. Dana Large Cap |
| Legg Mason vs. Small Cap Value | Legg Mason vs. The Hartford Small | Legg Mason vs. Artisan Small Cap | Legg Mason vs. Baird Smallmid Cap |
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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