Correlation Between Legg Mason and Ep Emerging
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Ep 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 Ep 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 Ep Emerging Markets, you can compare the effects of market volatilities on Legg Mason and Ep 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 Ep Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Ep Emerging.
Diversification Opportunities for Legg Mason and Ep Emerging
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legg and EPEIX is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Ep Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ep 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 Ep Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ep Emerging Markets has no effect on the direction of Legg Mason i.e., Legg Mason and Ep Emerging go up and down completely randomly.
Pair Corralation between Legg Mason and Ep Emerging
Assuming the 90 days horizon Legg Mason Partners is expected to generate 39.53 times more return on investment than Ep Emerging. However, Legg Mason is 39.53 times more volatile than Ep Emerging Markets. It trades about 0.06 of its potential returns per unit of risk. Ep Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest 343.00 in Legg Mason Partners on September 4, 2024 and sell it today you would lose (243.00) from holding Legg Mason Partners or give up 70.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Ep Emerging Markets
Performance |
| Timeline |
| Legg Mason Partners |
| Ep Emerging Markets |
Legg Mason and Ep Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Ep Emerging
The main advantage of trading using opposite Legg Mason and Ep Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Ep 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 Ep Emerging will offset losses from the drop in Ep 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 |
| Ep Emerging vs. Ep Emerging Markets | Ep Emerging vs. Europac International Bond | Ep Emerging vs. Europac International Dividend | Ep Emerging vs. Europac International Dividend |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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