Correlation Between Baron Health and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Baron Health 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 Baron Health and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Health Care and Legg Mason Bw, you can compare the effects of market volatilities on Baron Health 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 Baron Health with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Legg Mason.
Diversification Opportunities for Baron Health and Legg Mason
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Legg is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care 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 Baron Health 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 Baron Health Care 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 Baron Health i.e., Baron Health and Legg Mason go up and down completely randomly.
Pair Corralation between Baron Health and Legg Mason
Assuming the 90 days horizon Baron Health Care is expected to generate 1.78 times more return on investment than Legg Mason. However, Baron Health is 1.78 times more volatile than Legg Mason Bw. It trades about -0.04 of its potential returns per unit of risk. Legg Mason Bw is currently generating about -0.12 per unit of risk. If you would invest 2,121 in Baron Health Care on September 3, 2024 and sell it today you would lose (50.00) from holding Baron Health Care or give up 2.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Legg Mason Bw
Performance |
| Timeline |
| Baron Health Care |
| Legg Mason Bw |
Baron Health and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Legg Mason
The main advantage of trading using opposite Baron Health and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health 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.| Baron Health vs. Vanguard Health Care | Baron Health vs. Vanguard Health Care | Baron Health vs. T Rowe Price | Baron Health vs. T Rowe Price |
| Legg Mason vs. Baron Health Care | Legg Mason vs. Baillie Gifford Health | Legg Mason vs. Highland Longshort Healthcare | Legg Mason vs. Prudential Health Sciences |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |