Correlation Between Legg Mason and Jpmorgan High
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Jpmorgan High 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 Jpmorgan High 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 Jpmorgan High Yield, you can compare the effects of market volatilities on Legg Mason and Jpmorgan High 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 Jpmorgan High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Jpmorgan High.
Diversification Opportunities for Legg Mason and Jpmorgan High
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Jpmorgan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Jpmorgan High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan High Yield 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 Jpmorgan High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan High Yield has no effect on the direction of Legg Mason i.e., Legg Mason and Jpmorgan High go up and down completely randomly.
Pair Corralation between Legg Mason and Jpmorgan High
Assuming the 90 days horizon Legg Mason Bw is expected to under-perform the Jpmorgan High. In addition to that, Legg Mason is 4.46 times more volatile than Jpmorgan High Yield. It trades about -0.08 of its total potential returns per unit of risk. Jpmorgan High Yield is currently generating about 0.29 per unit of volatility. If you would invest 657.00 in Jpmorgan High Yield on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Jpmorgan High Yield or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Jpmorgan High Yield
Performance |
| Timeline |
| Legg Mason Bw |
| Jpmorgan High Yield |
Legg Mason and Jpmorgan High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Jpmorgan High
The main advantage of trading using opposite Legg Mason and Jpmorgan High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Jpmorgan High 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 Jpmorgan High will offset losses from the drop in Jpmorgan High's long position.| Legg Mason vs. Simt Multi Asset Inflation | Legg Mason vs. Loomis Sayles Inflation | Legg Mason vs. Guggenheim Managed Futures | Legg Mason vs. Ab Bond Inflation |
| Jpmorgan High vs. Ab Fixed Income Shares | Jpmorgan High vs. Calamos Global Equity | Jpmorgan High vs. Qs Global Equity | Jpmorgan High vs. Ab Select Equity |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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