Correlation Between Legg Mason and Shelton Emerging
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Shelton Emerging 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 Shelton Emerging 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 Shelton Emerging Markets, you can compare the effects of market volatilities on Legg Mason and Shelton Emerging 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 Shelton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Shelton Emerging.
Diversification Opportunities for Legg Mason and Shelton Emerging
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legg and Shelton is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Shelton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton Emerging Markets 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 Shelton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton Emerging Markets has no effect on the direction of Legg Mason i.e., Legg Mason and Shelton Emerging go up and down completely randomly.
Pair Corralation between Legg Mason and Shelton Emerging
Assuming the 90 days horizon Legg Mason Partners is expected to generate 0.12 times more return on investment than Shelton Emerging. However, Legg Mason Partners is 8.16 times less risky than Shelton Emerging. It trades about 0.13 of its potential returns per unit of risk. Shelton Emerging Markets is currently generating about -0.01 per unit of risk. If you would invest 99.00 in Legg Mason Partners on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Legg Mason Partners or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Shelton Emerging Markets
Performance |
| Timeline |
| Legg Mason Partners |
| Shelton Emerging Markets |
Legg Mason and Shelton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Shelton Emerging
The main advantage of trading using opposite Legg Mason and Shelton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Shelton Emerging 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 Shelton Emerging will offset losses from the drop in Shelton Emerging's long position.| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
| Shelton Emerging vs. Wcm Focused Emerging | Shelton Emerging vs. Balter Invenomic Fund | Shelton Emerging vs. California Tax Free Income | Shelton Emerging vs. Shelton Funds |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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