Correlation Between Alternative Asset and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Alternative Asset 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 Alternative Asset and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Asset Allocation and Legg Mason Bw, you can compare the effects of market volatilities on Alternative Asset 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 Alternative Asset with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Asset and Legg Mason.
Diversification Opportunities for Alternative Asset and Legg Mason
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alternative and LEGG is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Asset Allocation 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 Alternative Asset 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 Alternative Asset Allocation 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 Alternative Asset i.e., Alternative Asset and Legg Mason go up and down completely randomly.
Pair Corralation between Alternative Asset and Legg Mason
Assuming the 90 days horizon Alternative Asset Allocation is expected to generate 0.15 times more return on investment than Legg Mason. However, Alternative Asset Allocation is 6.7 times less risky than Legg Mason. It trades about 0.18 of its potential returns per unit of risk. Legg Mason Bw is currently generating about -0.09 per unit of risk. If you would invest 1,587 in Alternative Asset Allocation on November 18, 2024 and sell it today you would earn a total of 35.00 from holding Alternative Asset Allocation or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Asset Allocation vs. Legg Mason Bw
Performance |
| Timeline |
| Alternative Asset |
| Legg Mason Bw |
Alternative Asset and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Asset and Legg Mason
The main advantage of trading using opposite Alternative Asset and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Asset 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 idea behind Alternative Asset Allocation and Legg Mason Bw pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Legg Mason vs. Clearbridge Aggressive Growth | Legg Mason vs. Clearbridge Small Cap | Legg Mason vs. Qs International Equity | Legg Mason vs. Clearbridge Appreciation Fund |
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.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |