Correlation Between Legg Mason and Voya Target
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Voya Target 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 Voya Target 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 Voya Target Retirement, you can compare the effects of market volatilities on Legg Mason and Voya Target 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 Voya Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Voya Target.
Diversification Opportunities for Legg Mason and Voya Target
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Voya is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Voya Target Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Target Retirement 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 Voya Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Target Retirement has no effect on the direction of Legg Mason i.e., Legg Mason and Voya Target go up and down completely randomly.
Pair Corralation between Legg Mason and Voya Target
Assuming the 90 days horizon Legg Mason is expected to generate 1.23 times less return on investment than Voya Target. In addition to that, Legg Mason is 1.09 times more volatile than Voya Target Retirement. It trades about 0.08 of its total potential returns per unit of risk. Voya Target Retirement is currently generating about 0.1 per unit of volatility. If you would invest 1,095 in Voya Target Retirement on September 12, 2024 and sell it today you would earn a total of 460.00 from holding Voya Target Retirement or generate 42.01% 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. Voya Target Retirement
Performance |
| Timeline |
| Legg Mason Bw |
| Voya Target Retirement |
Legg Mason and Voya Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Voya Target
The main advantage of trading using opposite Legg Mason and Voya Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Voya Target 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 Voya Target will offset losses from the drop in Voya Target'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 |
| Voya Target vs. Us Strategic Equity | Voya Target vs. Ab Select Equity | Voya Target vs. Sarofim Equity | Voya Target vs. Ms Global Fixed |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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