Correlation Between Legg Mason and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Vanguard 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 Vanguard 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 Vanguard Emerging Markets, you can compare the effects of market volatilities on Legg Mason and Vanguard 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 Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Vanguard Emerging.
Diversification Opportunities for Legg Mason and Vanguard Emerging
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Legg and Vanguard is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard 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 Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Legg Mason i.e., Legg Mason and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Legg Mason and Vanguard Emerging
Assuming the 90 days horizon Legg Mason is expected to generate 2.81 times less return on investment than Vanguard Emerging. But when comparing it to its historical volatility, Legg Mason Partners is 7.03 times less risky than Vanguard Emerging. It trades about 0.13 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,735 in Vanguard Emerging Markets on August 28, 2024 and sell it today you would earn a total of 147.00 from holding Vanguard Emerging Markets or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Legg Mason Partners vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Legg Mason Partners |
| Vanguard Emerging Markets |
Legg Mason and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Vanguard Emerging
The main advantage of trading using opposite Legg Mason and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Vanguard 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 Vanguard Emerging will offset losses from the drop in Vanguard 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 |
| Vanguard Emerging vs. T Rowe Price | Vanguard Emerging vs. Pace International Emerging | Vanguard Emerging vs. Artisan Emerging Markets | Vanguard Emerging vs. Legg Mason Partners |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |