Correlation Between Legg Mason and Strategic Allocation:
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Strategic Allocation: 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 Strategic Allocation: 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 Strategic Allocation Aggressive, you can compare the effects of market volatilities on Legg Mason and Strategic Allocation: 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 Strategic Allocation:. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Strategic Allocation:.
Diversification Opportunities for Legg Mason and Strategic Allocation:
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Strategic is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Strategic Allocation Aggressiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Allocation: 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 Strategic Allocation:. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Allocation: has no effect on the direction of Legg Mason i.e., Legg Mason and Strategic Allocation: go up and down completely randomly.
Pair Corralation between Legg Mason and Strategic Allocation:
Assuming the 90 days horizon Legg Mason Bw is expected to generate 1.18 times more return on investment than Strategic Allocation:. However, Legg Mason is 1.18 times more volatile than Strategic Allocation Aggressive. It trades about 0.08 of its potential returns per unit of risk. Strategic Allocation Aggressive is currently generating about 0.07 per unit of risk. If you would invest 1,775 in Legg Mason Bw on September 4, 2024 and sell it today you would earn a total of 599.00 from holding Legg Mason Bw or generate 33.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Legg Mason Bw vs. Strategic Allocation Aggressiv
Performance |
| Timeline |
| Legg Mason Bw |
| Strategic Allocation: |
Legg Mason and Strategic Allocation: Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Strategic Allocation:
The main advantage of trading using opposite Legg Mason and Strategic Allocation: positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Strategic Allocation: 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 Strategic Allocation: will offset losses from the drop in Strategic Allocation:'s long position.| Legg Mason vs. Inflation Protected Bond Fund | Legg Mason vs. Western Asset Inflation | Legg Mason vs. Fidelity Sai Inflationfocused | Legg Mason vs. Ab Bond Inflation |
| Strategic Allocation: vs. Royce Global Financial | Strategic Allocation: vs. Goldman Sachs Financial | Strategic Allocation: vs. Davis Financial Fund | Strategic Allocation: vs. Gabelli Global Financial |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |