Correlation Between Legg Mason and Nationwide Investor
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Nationwide Investor 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 Nationwide Investor 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 Nationwide Investor Destinations, you can compare the effects of market volatilities on Legg Mason and Nationwide Investor 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 Nationwide Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Nationwide Investor.
Diversification Opportunities for Legg Mason and Nationwide Investor
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Legg and Nationwide is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Nationwide Investor Destinatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Investor 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 Nationwide Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Investor has no effect on the direction of Legg Mason i.e., Legg Mason and Nationwide Investor go up and down completely randomly.
Pair Corralation between Legg Mason and Nationwide Investor
Assuming the 90 days horizon Legg Mason Partners is expected to generate 56.57 times more return on investment than Nationwide Investor. However, Legg Mason is 56.57 times more volatile than Nationwide Investor Destinations. It trades about 0.06 of its potential returns per unit of risk. Nationwide Investor Destinations is currently generating about 0.09 per unit of risk. If you would invest 343.00 in Legg Mason Partners on August 26, 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 | Very Weak |
| Accuracy | 98.81% |
| Values | Daily Returns |
Legg Mason Partners vs. Nationwide Investor Destinatio
Performance |
| Timeline |
| Legg Mason Partners |
| Nationwide Investor |
Legg Mason and Nationwide Investor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Nationwide Investor
The main advantage of trading using opposite Legg Mason and Nationwide Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Nationwide Investor 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 Nationwide Investor will offset losses from the drop in Nationwide Investor's long position.| Legg Mason vs. Dimensional Retirement Income | Legg Mason vs. Qs Moderate Growth | Legg Mason vs. Hartford Moderate Allocation | Legg Mason vs. Saat Moderate Strategy |
| Nationwide Investor vs. Legg Mason Partners | Nationwide Investor vs. Transamerica Emerging Markets | Nationwide Investor vs. Pace International Emerging | Nationwide Investor vs. Ep Emerging Markets |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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