Correlation Between Eic Value and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Eic Value 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 Eic Value and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eic Value Fund and Legg Mason Partners, you can compare the effects of market volatilities on Eic Value 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 Eic Value with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eic Value and Legg Mason.
Diversification Opportunities for Eic Value and Legg Mason
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eic and Legg is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund 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 Eic Value 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 Eic Value Fund 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 Eic Value i.e., Eic Value and Legg Mason go up and down completely randomly.
Pair Corralation between Eic Value and Legg Mason
Assuming the 90 days horizon Eic Value Fund is expected to generate 1.22 times more return on investment than Legg Mason. However, Eic Value is 1.22 times more volatile than Legg Mason Partners. It trades about 0.2 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 1,870 in Eic Value Fund on August 28, 2024 and sell it today you would earn a total of 51.00 from holding Eic Value Fund or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eic Value Fund vs. Legg Mason Partners
Performance |
| Timeline |
| Eic Value Fund |
| Legg Mason Partners |
Eic Value and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eic Value and Legg Mason
The main advantage of trading using opposite Eic Value and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eic Value 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.| Eic Value vs. Archer Balanced Fund | Eic Value vs. Balanced Fund Investor | Eic Value vs. Ab Value Fund | Eic Value vs. Volumetric Fund Volumetric |
| Legg Mason vs. Goldman Sachs Financial | Legg Mason vs. Fidelity Advisor Financial | Legg Mason vs. Financials Ultrasector Profund | Legg Mason vs. Blackrock Financial Institutions |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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