Correlation Between Legg Mason and Fuller Thaler
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Fuller Thaler 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 Fuller Thaler into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Bw and Fuller Thaler Behavioral, you can compare the effects of market volatilities on Legg Mason and Fuller Thaler 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 Fuller Thaler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Fuller Thaler.
Diversification Opportunities for Legg Mason and Fuller Thaler
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and FULLER is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Fuller Thaler Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuller Thaler Behavioral 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 Bw are associated (or correlated) with Fuller Thaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuller Thaler Behavioral has no effect on the direction of Legg Mason i.e., Legg Mason and Fuller Thaler go up and down completely randomly.
Pair Corralation between Legg Mason and Fuller Thaler
Assuming the 90 days horizon Legg Mason is expected to generate 1.18 times less return on investment than Fuller Thaler. But when comparing it to its historical volatility, Legg Mason Bw is 1.32 times less risky than Fuller Thaler. It trades about 0.21 of its potential returns per unit of risk. Fuller Thaler Behavioral is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,804 in Fuller Thaler Behavioral on September 3, 2024 and sell it today you would earn a total of 431.00 from holding Fuller Thaler Behavioral or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Fuller Thaler Behavioral
Performance |
| Timeline |
| Legg Mason Bw |
| Fuller Thaler Behavioral |
Legg Mason and Fuller Thaler Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Fuller Thaler
The main advantage of trading using opposite Legg Mason and Fuller Thaler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Fuller Thaler 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 Fuller Thaler will offset losses from the drop in Fuller Thaler's long position.| Legg Mason vs. Vanguard Value Index | Legg Mason vs. Dodge Cox Stock | Legg Mason vs. American Funds American | Legg Mason vs. American Funds American |
| Fuller Thaler vs. Vanguard Small Cap Index | Fuller Thaler vs. Vanguard Small Cap Index | Fuller Thaler vs. Vanguard Small Cap Index | Fuller Thaler vs. Vanguard Small Cap Index |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| CEOs Directory Screen CEOs from public companies around the world | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |