Correlation Between Bts Tactical and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Bts Tactical 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 Bts Tactical and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bts Tactical Fixed and Legg Mason Bw, you can compare the effects of market volatilities on Bts Tactical 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 Bts Tactical with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bts Tactical and Legg Mason.
Diversification Opportunities for Bts Tactical and Legg Mason
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bts and Legg is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bts Tactical Fixed 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 Bts Tactical 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 Bts Tactical Fixed 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 Bts Tactical i.e., Bts Tactical and Legg Mason go up and down completely randomly.
Pair Corralation between Bts Tactical and Legg Mason
Assuming the 90 days horizon Bts Tactical is expected to generate 2.15 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Bts Tactical Fixed is 2.6 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 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,989 in Legg Mason Bw on August 24, 2024 and sell it today you would earn a total of 281.00 from holding Legg Mason Bw or generate 14.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bts Tactical Fixed vs. Legg Mason Bw
Performance |
| Timeline |
| Bts Tactical Fixed |
| Legg Mason Bw |
Bts Tactical and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bts Tactical and Legg Mason
The main advantage of trading using opposite Bts Tactical and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bts Tactical 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.| Bts Tactical vs. Legg Mason Bw | Bts Tactical vs. William Blair Large | Bts Tactical vs. Touchstone Large Cap | Bts Tactical vs. Nuveen Winslow Large Cap |
| Legg Mason vs. Allianzgi Health Sciences | Legg Mason vs. Highland Longshort Healthcare | Legg Mason vs. Tekla Healthcare Opportunities | Legg Mason vs. Hartford Healthcare Hls |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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