Correlation Between Legg Mason and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Mid Cap 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 Mid Cap 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 Mid Cap Growth Profund, you can compare the effects of market volatilities on Legg Mason and Mid Cap 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 Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Mid Cap.
Diversification Opportunities for Legg Mason and Mid Cap
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legg and Mid is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Mid Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Legg Mason i.e., Legg Mason and Mid Cap go up and down completely randomly.
Pair Corralation between Legg Mason and Mid Cap
Assuming the 90 days horizon Legg Mason Partners is expected to generate 22.46 times more return on investment than Mid Cap. However, Legg Mason is 22.46 times more volatile than Mid Cap Growth Profund. It trades about 0.04 of its potential returns per unit of risk. Mid Cap Growth Profund is currently generating about 0.06 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. Mid Cap Growth Profund
Performance |
| Timeline |
| Legg Mason Partners |
| Mid Cap Growth |
Legg Mason and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Mid Cap
The main advantage of trading using opposite Legg Mason and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap'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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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