Correlation Between Cutler Equity and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Cutler Equity 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 Cutler Equity and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cutler Equity and Legg Mason Bw, you can compare the effects of market volatilities on Cutler Equity 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 Cutler Equity with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cutler Equity and Legg Mason.
Diversification Opportunities for Cutler Equity and Legg Mason
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cutler and Legg is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cutler Equity 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 Cutler Equity 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 Cutler Equity 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 Cutler Equity i.e., Cutler Equity and Legg Mason go up and down completely randomly.
Pair Corralation between Cutler Equity and Legg Mason
Assuming the 90 days horizon Cutler Equity is expected to generate 2.93 times more return on investment than Legg Mason. However, Cutler Equity is 2.93 times more volatile than Legg Mason Bw. It trades about 0.1 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.09 per unit of risk. If you would invest 2,280 in Cutler Equity on September 12, 2024 and sell it today you would earn a total of 619.00 from holding Cutler Equity or generate 27.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cutler Equity vs. Legg Mason Bw
Performance |
| Timeline |
| Cutler Equity |
| Legg Mason Bw |
Cutler Equity and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cutler Equity and Legg Mason
The main advantage of trading using opposite Cutler Equity and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cutler Equity 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.| Cutler Equity vs. Ab Global Risk | Cutler Equity vs. Kinetics Global Fund | Cutler Equity vs. Siit Global Managed | Cutler Equity vs. Mirova Global Green |
| Legg Mason vs. Rationalpier 88 Convertible | Legg Mason vs. Gabelli Convertible And | Legg Mason vs. Absolute Convertible Arbitrage | Legg Mason vs. Lord Abbett Convertible |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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