Correlation Between Legg Mason and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Lord Abbett 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 Lord Abbett 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 Lord Abbett Growth, you can compare the effects of market volatilities on Legg Mason and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Lord Abbett.
Diversification Opportunities for Legg Mason and Lord Abbett
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Lord is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Lord Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Growth 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Growth has no effect on the direction of Legg Mason i.e., Legg Mason and Lord Abbett go up and down completely randomly.
Pair Corralation between Legg Mason and Lord Abbett
Assuming the 90 days horizon Legg Mason is expected to generate 2.61 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Legg Mason Bw is 1.41 times less risky than Lord Abbett. It trades about 0.21 of its potential returns per unit of risk. Lord Abbett Growth is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 3,003 in Lord Abbett Growth on August 29, 2024 and sell it today you would earn a total of 399.00 from holding Lord Abbett Growth or generate 13.29% 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. Lord Abbett Growth
Performance |
| Timeline |
| Legg Mason Bw |
| Lord Abbett Growth |
Legg Mason and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Lord Abbett
The main advantage of trading using opposite Legg Mason and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett'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 |
| Lord Abbett vs. Qs Large Cap | Lord Abbett vs. Transamerica Large Cap | Lord Abbett vs. Legg Mason Bw | Lord Abbett vs. Massmutual Select T |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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