Correlation Between Matson Money and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Matson Money 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 Matson Money and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matson Money Fixed and Legg Mason Partners, you can compare the effects of market volatilities on Matson Money 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 Matson Money with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson Money and Legg Mason.
Diversification Opportunities for Matson Money and Legg Mason
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Matson and Legg is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Fixed 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 Matson Money 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 Matson Money Fixed 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 Matson Money i.e., Matson Money and Legg Mason go up and down completely randomly.
Pair Corralation between Matson Money and Legg Mason
Assuming the 90 days horizon Matson Money Fixed is expected to generate 0.29 times more return on investment than Legg Mason. However, Matson Money Fixed is 3.45 times less risky than Legg Mason. It trades about 0.14 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.04 per unit of risk. If you would invest 2,294 in Matson Money Fixed on September 1, 2024 and sell it today you would earn a total of 174.00 from holding Matson Money Fixed or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matson Money Fixed vs. Legg Mason Partners
Performance |
| Timeline |
| Matson Money Fixed |
| Legg Mason Partners |
Matson Money and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matson Money and Legg Mason
The main advantage of trading using opposite Matson Money and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matson Money 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.| Matson Money vs. Cref Money Market | Matson Money vs. Dreyfus Institutional Reserves | Matson Money vs. Franklin Government Money | Matson Money vs. Chestnut Street Exchange |
| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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