Correlation Between First Trust and Leggmason Partners
Can any of the company-specific risk be diversified away by investing in both First Trust and Leggmason Partners 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 First Trust and Leggmason Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Preferred and Leggmason Partners Institutional, you can compare the effects of market volatilities on First Trust and Leggmason Partners 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 First Trust with a short position of Leggmason Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Leggmason Partners.
Diversification Opportunities for First Trust and Leggmason Partners
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Leggmason is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Preferred and Leggmason Partners Institution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggmason Partners and First Trust 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 First Trust Preferred are associated (or correlated) with Leggmason Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggmason Partners has no effect on the direction of First Trust i.e., First Trust and Leggmason Partners go up and down completely randomly.
Pair Corralation between First Trust and Leggmason Partners
If you would invest 1,968 in First Trust Preferred on August 31, 2024 and sell it today you would earn a total of 7.00 from holding First Trust Preferred or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Preferred vs. Leggmason Partners Institution
Performance |
| Timeline |
| First Trust Preferred |
| Leggmason Partners |
First Trust and Leggmason Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Leggmason Partners
The main advantage of trading using opposite First Trust and Leggmason Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Leggmason Partners 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 Leggmason Partners will offset losses from the drop in Leggmason Partners' long position.| First Trust vs. Leggmason Partners Institutional | First Trust vs. Volumetric Fund Volumetric | First Trust vs. Ab Value Fund | First Trust vs. Abr 7525 Volatility |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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