Correlation Between Aberdeen Select and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Aberdeen Select 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 Aberdeen Select and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Select International and Legg Mason Partners, you can compare the effects of market volatilities on Aberdeen Select 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 Aberdeen Select with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Select and Legg Mason.
Diversification Opportunities for Aberdeen Select and Legg Mason
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aberdeen and Legg is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Select International 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 Aberdeen Select 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 Aberdeen Select International 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 Aberdeen Select i.e., Aberdeen Select and Legg Mason go up and down completely randomly.
Pair Corralation between Aberdeen Select and Legg Mason
Assuming the 90 days horizon Aberdeen Select is expected to generate 7.59 times less return on investment than Legg Mason. In addition to that, Aberdeen Select is 1.45 times more volatile than Legg Mason Partners. It trades about 0.01 of its total potential returns per unit of risk. Legg Mason Partners is currently generating about 0.12 per unit of volatility. If you would invest 1,435 in Legg Mason Partners on September 3, 2024 and sell it today you would earn a total of 187.00 from holding Legg Mason Partners or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Select International vs. Legg Mason Partners
Performance |
| Timeline |
| Aberdeen Select Inte |
| Legg Mason Partners |
Aberdeen Select and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Select and Legg Mason
The main advantage of trading using opposite Aberdeen Select and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Select 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.| Aberdeen Select vs. Qs Large Cap | Aberdeen Select vs. Jhancock Disciplined Value | Aberdeen Select vs. Vela Large Cap | Aberdeen Select vs. Fundamental Large Cap |
| Legg Mason vs. Avantis Large Cap | Legg Mason vs. Qs Large Cap | Legg Mason vs. Americafirst Large Cap | Legg Mason vs. Dana Large Cap |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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