Correlation Between Chestnut Street and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Chestnut Street 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 Chestnut Street and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chestnut Street Exchange and Legg Mason Bw, you can compare the effects of market volatilities on Chestnut Street 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 Chestnut Street with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and Legg Mason.
Diversification Opportunities for Chestnut Street and Legg Mason
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chestnut and Legg is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange 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 Chestnut Street 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 Chestnut Street Exchange 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 Chestnut Street i.e., Chestnut Street and Legg Mason go up and down completely randomly.
Pair Corralation between Chestnut Street and Legg Mason
Assuming the 90 days horizon Chestnut Street Exchange is expected to generate 0.73 times more return on investment than Legg Mason. However, Chestnut Street Exchange is 1.38 times less risky than Legg Mason. It trades about 0.13 of its potential returns per unit of risk. Legg Mason Bw is currently generating about -0.08 per unit of risk. If you would invest 116,336 in Chestnut Street Exchange on September 12, 2024 and sell it today you would earn a total of 1,244 from holding Chestnut Street Exchange or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chestnut Street Exchange vs. Legg Mason Bw
Performance |
| Timeline |
| Chestnut Street Exchange |
| Legg Mason Bw |
Chestnut Street and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and Legg Mason
The main advantage of trading using opposite Chestnut Street and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street 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.| Chestnut Street vs. Global Gold Fund | Chestnut Street vs. Gold And Precious | Chestnut Street vs. Europac Gold Fund | Chestnut Street vs. Fidelity Advisor Gold |
| Legg Mason vs. Hewitt Money Market | Legg Mason vs. John Hancock Money | Legg Mason vs. Hsbc Treasury Money | Legg Mason vs. Chestnut Street Exchange |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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