Correlation Between Empire State and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Empire State 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 Empire State and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Legg Mason Bw, you can compare the effects of market volatilities on Empire State 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 Empire State with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Legg Mason.
Diversification Opportunities for Empire State and Legg Mason
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Empire and LEGG is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty 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 Empire State 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 Empire State Realty 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 Empire State i.e., Empire State and Legg Mason go up and down completely randomly.
Pair Corralation between Empire State and Legg Mason
Given the investment horizon of 90 days Empire State Realty is expected to generate 3.65 times more return on investment than Legg Mason. However, Empire State is 3.65 times more volatile than Legg Mason Bw. It trades about 0.17 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.01 per unit of risk. If you would invest 1,049 in Empire State Realty on September 2, 2024 and sell it today you would earn a total of 47.00 from holding Empire State Realty or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Legg Mason Bw
Performance |
| Timeline |
| Empire State Realty |
| Legg Mason Bw |
Empire State and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Legg Mason
The main advantage of trading using opposite Empire State and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State 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.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Legg Mason vs. Franklin Mutual Beacon | Legg Mason vs. Templeton Developing Markets | Legg Mason vs. Franklin Mutual Global | Legg Mason vs. Franklin Mutual Global |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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