Correlation Between Legg Mason and Principal Lifetime
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Principal Lifetime 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 Principal Lifetime 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 Principal Lifetime Hybrid, you can compare the effects of market volatilities on Legg Mason and Principal Lifetime 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 Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Principal Lifetime.
Diversification Opportunities for Legg Mason and Principal Lifetime
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and PRINCIPAL is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Principal Lifetime Hybrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime Hybrid 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 Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime Hybrid has no effect on the direction of Legg Mason i.e., Legg Mason and Principal Lifetime go up and down completely randomly.
Pair Corralation between Legg Mason and Principal Lifetime
Assuming the 90 days horizon Legg Mason Bw is expected to generate 0.98 times more return on investment than Principal Lifetime. However, Legg Mason Bw is 1.02 times less risky than Principal Lifetime. It trades about 0.12 of its potential returns per unit of risk. Principal Lifetime Hybrid is currently generating about 0.1 per unit of risk. If you would invest 1,726 in Legg Mason Bw on September 4, 2024 and sell it today you would earn a total of 648.00 from holding Legg Mason Bw or generate 37.54% 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. Principal Lifetime Hybrid
Performance |
| Timeline |
| Legg Mason Bw |
| Principal Lifetime Hybrid |
Legg Mason and Principal Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Principal Lifetime
The main advantage of trading using opposite Legg Mason and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Principal Lifetime 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 Principal Lifetime will offset losses from the drop in Principal Lifetime'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 |
| Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |