Correlation Between Boeing and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Boeing 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 Boeing and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Legg Mason Partners, you can compare the effects of market volatilities on Boeing 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 Boeing with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Legg Mason.
Diversification Opportunities for Boeing and Legg Mason
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boeing and Legg is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing 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 Boeing 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 The Boeing 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 Boeing i.e., Boeing and Legg Mason go up and down completely randomly.
Pair Corralation between Boeing and Legg Mason
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Legg Mason. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 10.87 times less risky than Legg Mason. The stock trades about -0.03 of its potential returns per unit of risk. The Legg Mason Partners is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 93.00 in Legg Mason Partners on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Legg Mason Partners or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
The Boeing vs. Legg Mason Partners
Performance |
| Timeline |
| Boeing |
| Legg Mason Partners |
Boeing and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Legg Mason
The main advantage of trading using opposite Boeing and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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.| Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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