Correlation Between Legg Mason and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Massmutual Select 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 Massmutual Select 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 Massmutual Select Growth, you can compare the effects of market volatilities on Legg Mason and Massmutual Select 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 Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Massmutual Select.
Diversification Opportunities for Legg Mason and Massmutual Select
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legg and Massmutual is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Massmutual Select Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select 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 Massmutual Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Select Growth has no effect on the direction of Legg Mason i.e., Legg Mason and Massmutual Select go up and down completely randomly.
Pair Corralation between Legg Mason and Massmutual Select
Assuming the 90 days horizon Legg Mason Bw is expected to generate 0.14 times more return on investment than Massmutual Select. However, Legg Mason Bw is 7.15 times less risky than Massmutual Select. It trades about 0.16 of its potential returns per unit of risk. Massmutual Select Growth is currently generating about -0.08 per unit of risk. If you would invest 2,037 in Legg Mason Bw on September 3, 2024 and sell it today you would earn a total of 337.00 from holding Legg Mason Bw or generate 16.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.8% |
| Values | Daily Returns |
Legg Mason Bw vs. Massmutual Select Growth
Performance |
| Timeline |
| Legg Mason Bw |
| Massmutual Select Growth |
Legg Mason and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Massmutual Select
The main advantage of trading using opposite Legg Mason and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Massmutual Select 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 Massmutual Select will offset losses from the drop in Massmutual Select's long position.| Legg Mason vs. Dodge Cox Stock | Legg Mason vs. American Funds American | Legg Mason vs. American Funds American | Legg Mason vs. American Mutual Fund |
| Massmutual Select vs. Adams Diversified Equity | Massmutual Select vs. Legg Mason Bw | Massmutual Select vs. The Gabelli Small | Massmutual Select vs. Wasatch Small Cap |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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