Correlation Between Aberdeen China and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Aberdeen China 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 Aberdeen China and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen China Oppty and Legg Mason Partners, you can compare the effects of market volatilities on Aberdeen China 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 Aberdeen China with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen China and Legg Mason.
Diversification Opportunities for Aberdeen China and Legg Mason
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aberdeen and Legg is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen China Oppty 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 Aberdeen China 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 Aberdeen China Oppty 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 Aberdeen China i.e., Aberdeen China and Legg Mason go up and down completely randomly.
Pair Corralation between Aberdeen China and Legg Mason
Assuming the 90 days horizon Aberdeen China Oppty is expected to generate 0.67 times more return on investment than Legg Mason. However, Aberdeen China Oppty is 1.49 times less risky than Legg Mason. It trades about -0.12 of its potential returns per unit of risk. Legg Mason Partners is currently generating about -0.23 per unit of risk. If you would invest 2,147 in Aberdeen China Oppty on September 12, 2024 and sell it today you would lose (86.00) from holding Aberdeen China Oppty or give up 4.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen China Oppty vs. Legg Mason Partners
Performance |
| Timeline |
| Aberdeen China Oppty |
| Legg Mason Partners |
Aberdeen China and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen China and Legg Mason
The main advantage of trading using opposite Aberdeen China and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen China 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.| Aberdeen China vs. Franklin Government Money | Aberdeen China vs. Edward Jones Money | Aberdeen China vs. Ab Government Exchange | Aberdeen China vs. The Gabelli Money |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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