Correlation Between Ab Global and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Ab Global 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 Ab Global and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Risk and Legg Mason Partners, you can compare the effects of market volatilities on Ab Global 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 Ab Global with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Legg Mason.
Diversification Opportunities for Ab Global and Legg Mason
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between CBSYX and Legg is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk 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 Ab Global 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 Ab Global Risk 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 Ab Global i.e., Ab Global and Legg Mason go up and down completely randomly.
Pair Corralation between Ab Global and Legg Mason
Assuming the 90 days horizon Ab Global Risk is expected to generate 3.84 times more return on investment than Legg Mason. However, Ab Global is 3.84 times more volatile than Legg Mason Partners. It trades about 0.12 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.13 per unit of risk. If you would invest 1,572 in Ab Global Risk on September 3, 2024 and sell it today you would earn a total of 237.00 from holding Ab Global Risk or generate 15.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Risk vs. Legg Mason Partners
Performance |
| Timeline |
| Ab Global Risk |
| Legg Mason Partners |
Ab Global and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Legg Mason
The main advantage of trading using opposite Ab Global and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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.| Ab Global vs. Absolute Convertible Arbitrage | Ab Global vs. Putnam Convertible Incm Gwth | Ab Global vs. Virtus Convertible | Ab Global vs. Lord Abbett Convertible |
| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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