Correlation Between Highland Long/short and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Highland Long/short 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 Highland Long/short and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highland Longshort Healthcare and Legg Mason Bw, you can compare the effects of market volatilities on Highland Long/short 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 Highland Long/short with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Legg Mason.
Diversification Opportunities for Highland Long/short and Legg Mason
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Highland and Legg is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare 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 Highland Long/short 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 Highland Longshort 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 Bw has no effect on the direction of Highland Long/short i.e., Highland Long/short and Legg Mason go up and down completely randomly.
Pair Corralation between Highland Long/short and Legg Mason
Assuming the 90 days horizon Highland Longshort Healthcare is expected to generate 0.44 times more return on investment than Legg Mason. However, Highland Longshort Healthcare is 2.29 times less risky than Legg Mason. It trades about 0.2 of its potential returns per unit of risk. Legg Mason Bw is currently generating about -0.12 per unit of risk. If you would invest 1,621 in Highland Longshort Healthcare on September 3, 2024 and sell it today you would earn a total of 42.00 from holding Highland Longshort Healthcare or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Legg Mason Bw
Performance |
| Timeline |
| Highland Long/short |
| Legg Mason Bw |
Highland Long/short and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Long/short and Legg Mason
The main advantage of trading using opposite Highland Long/short and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short 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.| Highland Long/short vs. Ab Value Fund | Highland Long/short vs. Balanced Fund Investor | Highland Long/short vs. Rbb Fund | Highland Long/short vs. Omni Small Cap Value |
| Legg Mason vs. Baron Health Care | Legg Mason vs. Baillie Gifford Health | Legg Mason vs. Highland Longshort Healthcare | Legg Mason vs. Prudential Health Sciences |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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