Correlation Between Harding Loevner and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Harding Loevner 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 Harding Loevner and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harding Loevner Global and Legg Mason Global, you can compare the effects of market volatilities on Harding Loevner 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 Harding Loevner with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Legg Mason.
Diversification Opportunities for Harding Loevner and Legg Mason
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Harding and Legg is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Global 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 Harding Loevner 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 Harding Loevner Global 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 Harding Loevner i.e., Harding Loevner and Legg Mason go up and down completely randomly.
Pair Corralation between Harding Loevner and Legg Mason
Assuming the 90 days horizon Harding Loevner Global is expected to under-perform the Legg Mason. In addition to that, Harding Loevner is 3.52 times more volatile than Legg Mason Global. It trades about -0.22 of its total potential returns per unit of risk. Legg Mason Global is currently generating about -0.32 per unit of volatility. If you would invest 927.00 in Legg Mason Global on October 12, 2024 and sell it today you would lose (14.00) from holding Legg Mason Global or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harding Loevner Global vs. Legg Mason Global
Performance |
| Timeline |
| Harding Loevner Global |
| Legg Mason Global |
Harding Loevner and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harding Loevner and Legg Mason
The main advantage of trading using opposite Harding Loevner and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner 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.| Harding Loevner vs. Harding Loevner Funds | Harding Loevner vs. Harding Loevner Frontier | Harding Loevner vs. Harding Loevner International | Harding Loevner vs. Harding Loevner International |
| Legg Mason vs. Blackrock Health Sciences | Legg Mason vs. Invesco Global Health | Legg Mason vs. Prudential Health Sciences | Legg Mason vs. Eventide Healthcare Life |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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