Correlation Between Legg Mason and High Yield
Can any of the company-specific risk be diversified away by investing in both Legg Mason and High Yield 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 Legg Mason and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Partners and High Yield Municipal Fund, you can compare the effects of market volatilities on Legg Mason and High Yield 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 Legg Mason with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and High Yield.
Diversification Opportunities for Legg Mason and High Yield
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legg and High is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and Legg Mason 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 Legg Mason Partners are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Legg Mason i.e., Legg Mason and High Yield go up and down completely randomly.
Pair Corralation between Legg Mason and High Yield
Assuming the 90 days horizon Legg Mason Partners is expected to generate 77.19 times more return on investment than High Yield. However, Legg Mason is 77.19 times more volatile than High Yield Municipal Fund. It trades about 0.04 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.08 per unit of risk. If you would invest 94.00 in Legg Mason Partners on September 12, 2024 and sell it today you would earn a total of 6.00 from holding Legg Mason Partners or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Legg Mason Partners vs. High Yield Municipal Fund
Performance |
| Timeline |
| Legg Mason Partners |
| High Yield Municipal |
Legg Mason and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and High Yield
The main advantage of trading using opposite Legg Mason and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Legg Mason vs. Goldman Sachs Real | Legg Mason vs. Deutsche Real Estate | Legg Mason vs. Amg Managers Centersquare | Legg Mason vs. Pender Real Estate |
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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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