Correlation Between Federated Mdt and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Federated Mdt 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 Federated Mdt and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Mdt Large and Legg Mason Bw, you can compare the effects of market volatilities on Federated Mdt 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 Federated Mdt with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Mdt and Legg Mason.
Diversification Opportunities for Federated Mdt and Legg Mason
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Legg is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt Large 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 Federated Mdt 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 Federated Mdt Large 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 Federated Mdt i.e., Federated Mdt and Legg Mason go up and down completely randomly.
Pair Corralation between Federated Mdt and Legg Mason
Assuming the 90 days horizon Federated Mdt is expected to generate 1.08 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Federated Mdt Large is 1.06 times less risky than Legg Mason. It trades about 0.21 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,977 in Legg Mason Bw on November 30, 2024 and sell it today you would earn a total of 118.00 from holding Legg Mason Bw or generate 5.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Mdt Large vs. Legg Mason Bw
Performance |
| Timeline |
| Federated Mdt Large |
| Legg Mason Bw |
Federated Mdt and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Mdt and Legg Mason
The main advantage of trading using opposite Federated Mdt and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Mdt 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.| Federated Mdt vs. Federated Mdt Large | Federated Mdt vs. Federated Kaufmann Large | Federated Mdt vs. Federated Total Return | Federated Mdt vs. Nationwide Ziegler Nyse |
| Legg Mason vs. Clearbridge Aggressive Growth | Legg Mason vs. Clearbridge Small Cap | Legg Mason vs. Qs International Equity | Legg Mason vs. Clearbridge Appreciation Fund |
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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