Correlation Between Prudential Short and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Prudential 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 Prudential 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 Prudential Short Duration and Legg Mason Partners, you can compare the effects of market volatilities on Prudential 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 Prudential Short with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Short and Legg Mason.
Diversification Opportunities for Prudential Short and Legg Mason
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prudential and Legg is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Short Duration 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 Prudential 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 Prudential Short Duration 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 Prudential Short i.e., Prudential Short and Legg Mason go up and down completely randomly.
Pair Corralation between Prudential Short and Legg Mason
Assuming the 90 days horizon Prudential Short is expected to generate 571.0 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Prudential Short Duration is 1.76 times less risky than Legg Mason. It trades about 0.0 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 665.00 in Legg Mason Partners on September 2, 2024 and sell it today you would earn a total of 8.00 from holding Legg Mason Partners or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Short Duration vs. Legg Mason Partners
Performance |
| Timeline |
| Prudential Short Duration |
| Legg Mason Partners |
Prudential Short and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Short and Legg Mason
The main advantage of trading using opposite Prudential Short and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential 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.| Prudential Short vs. Global Gold Fund | Prudential Short vs. Vy Goldman Sachs | Prudential Short vs. Goldman Sachs Esg | Prudential Short vs. Gabelli Gold Fund |
| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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