Correlation Between Legg Mason and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Federated Mdt 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 Federated Mdt 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 Federated Mdt Large, you can compare the effects of market volatilities on Legg Mason and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Federated Mdt.
Diversification Opportunities for Legg Mason and Federated Mdt
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Federated is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Federated Mdt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Large 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Large has no effect on the direction of Legg Mason i.e., Legg Mason and Federated Mdt go up and down completely randomly.
Pair Corralation between Legg Mason and Federated Mdt
Assuming the 90 days horizon Legg Mason is expected to generate 1.87 times less return on investment than Federated Mdt. In addition to that, Legg Mason is 1.14 times more volatile than Federated Mdt Large. It trades about 0.05 of its total potential returns per unit of risk. Federated Mdt Large is currently generating about 0.1 per unit of volatility. If you would invest 2,577 in Federated Mdt Large on August 28, 2024 and sell it today you would earn a total of 1,171 from holding Federated Mdt Large or generate 45.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Federated Mdt Large
Performance |
| Timeline |
| Legg Mason Bw |
| Federated Mdt Large |
Legg Mason and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Federated Mdt
The main advantage of trading using opposite Legg Mason and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Federated Mdt 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 Federated Mdt will offset losses from the drop in Federated Mdt'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 |
| Federated Mdt vs. Federated Mdt Large | Federated Mdt vs. Nationwide Ziegler Nyse | Federated Mdt vs. Federated Equity Income | Federated Mdt vs. Federated Mdt Large |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |