Correlation Between Legg Mason and Smead International
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Smead International 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 Smead International 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 Smead International Value, you can compare the effects of market volatilities on Legg Mason and Smead International 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 Smead International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Smead International.
Diversification Opportunities for Legg Mason and Smead International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legg and Smead is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Smead International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead International Value 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 Smead International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead International Value has no effect on the direction of Legg Mason i.e., Legg Mason and Smead International go up and down completely randomly.
Pair Corralation between Legg Mason and Smead International
Assuming the 90 days horizon Legg Mason Partners is expected to generate 26.62 times more return on investment than Smead International. However, Legg Mason is 26.62 times more volatile than Smead International Value. It trades about 0.06 of its potential returns per unit of risk. Smead International Value is currently generating about 0.04 per unit of risk. If you would invest 377.00 in Legg Mason Partners on September 12, 2024 and sell it today you would lose (277.00) from holding Legg Mason Partners or give up 73.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Smead International Value
Performance |
| Timeline |
| Legg Mason Partners |
| Smead International Value |
Legg Mason and Smead International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Smead International
The main advantage of trading using opposite Legg Mason and Smead International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Smead International 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 Smead International will offset losses from the drop in Smead International'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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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