Correlation Between The Hartford and Legg Mason
Can any of the company-specific risk be diversified away by investing in both The Hartford 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 The Hartford and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Healthcare and Legg Mason Global, you can compare the effects of market volatilities on The Hartford 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 The Hartford with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Legg Mason.
Diversification Opportunities for The Hartford and Legg Mason
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between The and Legg is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Healthcare and Legg Mason Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Global and The Hartford 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 The Hartford Healthcare 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 Global has no effect on the direction of The Hartford i.e., The Hartford and Legg Mason go up and down completely randomly.
Pair Corralation between The Hartford and Legg Mason
Assuming the 90 days horizon The Hartford Healthcare is expected to generate 4.58 times more return on investment than Legg Mason. However, The Hartford is 4.58 times more volatile than Legg Mason Global. It trades about 0.27 of its potential returns per unit of risk. Legg Mason Global is currently generating about 0.32 per unit of risk. If you would invest 4,407 in The Hartford Healthcare on November 8, 2024 and sell it today you would earn a total of 218.00 from holding The Hartford Healthcare or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford Healthcare vs. Legg Mason Global
Performance |
| Timeline |
| The Hartford Healthcare |
| Legg Mason Global |
The Hartford and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and Legg Mason
The main advantage of trading using opposite The Hartford and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford 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.| The Hartford vs. The Hartford Healthcare | The Hartford vs. Hartford Healthcare Hls | The Hartford vs. The Hartford Global | The Hartford vs. Hartford Healthcare Hls |
| Legg Mason vs. Sprott Gold Equity | Legg Mason vs. Deutsche Gold Precious | Legg Mason vs. World Precious Minerals | Legg Mason vs. James Balanced Golden |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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