Correlation Between Legg Mason and The Hartford
Can any of the company-specific risk be diversified away by investing in both Legg Mason and The Hartford 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 The Hartford 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 The Hartford Growth, you can compare the effects of market volatilities on Legg Mason and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and The Hartford.
Diversification Opportunities for Legg Mason and The Hartford
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and The is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford 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 Bw are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth has no effect on the direction of Legg Mason i.e., Legg Mason and The Hartford go up and down completely randomly.
Pair Corralation between Legg Mason and The Hartford
Assuming the 90 days horizon Legg Mason Bw is expected to generate 1.89 times more return on investment than The Hartford. However, Legg Mason is 1.89 times more volatile than The Hartford Growth. It trades about 0.34 of its potential returns per unit of risk. The Hartford Growth is currently generating about 0.36 per unit of risk. If you would invest 2,216 in Legg Mason Bw on September 4, 2024 and sell it today you would earn a total of 158.00 from holding Legg Mason Bw or generate 7.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Legg Mason Bw vs. The Hartford Growth
Performance |
| Timeline |
| Legg Mason Bw |
| Hartford Growth |
Legg Mason and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and The Hartford
The main advantage of trading using opposite Legg Mason and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| Legg Mason vs. Clearbridge Aggressive Growth | Legg Mason vs. Clearbridge Small Cap | Legg Mason vs. Qs International Equity | Legg Mason vs. Clearbridge Appreciation Fund |
| The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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