Correlation Between Legg Mason and Tiaa Cref
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Tiaa Cref 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 Tiaa Cref 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 Tiaa Cref Lifecycle Index, you can compare the effects of market volatilities on Legg Mason and Tiaa Cref 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 Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Tiaa Cref.
Diversification Opportunities for Legg Mason and Tiaa Cref
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Tiaa is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Tiaa Cref Lifecycle Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifecycle 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 Tiaa Cref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Lifecycle has no effect on the direction of Legg Mason i.e., Legg Mason and Tiaa Cref go up and down completely randomly.
Pair Corralation between Legg Mason and Tiaa Cref
Assuming the 90 days horizon Legg Mason Bw is expected to under-perform the Tiaa Cref. In addition to that, Legg Mason is 1.39 times more volatile than Tiaa Cref Lifecycle Index. It trades about -0.09 of its total potential returns per unit of risk. Tiaa Cref Lifecycle Index is currently generating about 0.14 per unit of volatility. If you would invest 1,455 in Tiaa Cref Lifecycle Index on September 13, 2024 and sell it today you would earn a total of 17.00 from holding Tiaa Cref Lifecycle Index or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Tiaa Cref Lifecycle Index
Performance |
| Timeline |
| Legg Mason Bw |
| Tiaa Cref Lifecycle |
Legg Mason and Tiaa Cref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Tiaa Cref
The main advantage of trading using opposite Legg Mason and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Tiaa Cref 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 Tiaa Cref will offset losses from the drop in Tiaa Cref's long position.| Legg Mason vs. Small Cap Stock | Legg Mason vs. Century Small Cap | Legg Mason vs. Omni Small Cap Value | Legg Mason vs. Versatile Bond Portfolio |
| Tiaa Cref vs. Ep Emerging Markets | Tiaa Cref vs. Artisan Emerging Markets | Tiaa Cref vs. Kinetics Market Opportunities | Tiaa Cref vs. Shelton Emerging Markets |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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