Correlation Between IShares SP and Legg Mason
Can any of the company-specific risk be diversified away by investing in both IShares SP 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 IShares SP and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and Legg Mason Low, you can compare the effects of market volatilities on IShares SP 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 IShares SP with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Legg Mason.
Diversification Opportunities for IShares SP and Legg Mason
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Legg is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and Legg Mason Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Low and IShares SP 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 iShares SP 500 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 Low has no effect on the direction of IShares SP i.e., IShares SP and Legg Mason go up and down completely randomly.
Pair Corralation between IShares SP and Legg Mason
Considering the 90-day investment horizon iShares SP 500 is expected to under-perform the Legg Mason. But the etf apears to be less risky and, when comparing its historical volatility, iShares SP 500 is 1.17 times less risky than Legg Mason. The etf trades about -0.1 of its potential returns per unit of risk. The Legg Mason Low is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 4,080 in Legg Mason Low on November 27, 2024 and sell it today you would lose (33.00) from holding Legg Mason Low or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP 500 vs. Legg Mason Low
Performance |
| Timeline |
| iShares SP 500 |
| Legg Mason Low |
IShares SP and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and Legg Mason
The main advantage of trading using opposite IShares SP and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP 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.| IShares SP vs. iShares SP 500 | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares SP Small Cap | IShares SP vs. iShares SP Mid Cap |
| Legg Mason vs. Franklin International Low | Legg Mason vs. Invesco SP SmallCap | Legg Mason vs. FlexShares Quality Dividend | Legg Mason vs. Invesco SP MidCap |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |