Correlation Between Legg Mason and Clearbridge Small
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Clearbridge Small 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 Clearbridge Small 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 Clearbridge Small Cap, you can compare the effects of market volatilities on Legg Mason and Clearbridge Small 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 Clearbridge Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Clearbridge Small.
Diversification Opportunities for Legg Mason and Clearbridge Small
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and CLEARBRIDGE is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Clearbridge Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Small Cap 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 Clearbridge Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Small Cap has no effect on the direction of Legg Mason i.e., Legg Mason and Clearbridge Small go up and down completely randomly.
Pair Corralation between Legg Mason and Clearbridge Small
Assuming the 90 days horizon Legg Mason Bw is expected to generate 0.59 times more return on investment than Clearbridge Small. However, Legg Mason Bw is 1.71 times less risky than Clearbridge Small. It trades about 0.1 of its potential returns per unit of risk. Clearbridge Small Cap is currently generating about -0.14 per unit of risk. If you would invest 1,984 in Legg Mason Bw on December 11, 2024 and sell it today you would earn a total of 64.00 from holding Legg Mason Bw or generate 3.23% 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. Clearbridge Small Cap
Performance |
| Timeline |
| Legg Mason Bw |
| Clearbridge Small Cap |
Legg Mason and Clearbridge Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Clearbridge Small
The main advantage of trading using opposite Legg Mason and Clearbridge Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Clearbridge Small 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 Clearbridge Small will offset losses from the drop in Clearbridge Small's long position.| Legg Mason vs. Towpath Technology | Legg Mason vs. Vanguard Information Technology | Legg Mason vs. Pgim Jennison Technology | Legg Mason vs. Icon Information Technology |
| Clearbridge Small vs. Tiaa Cref Real Estate | Clearbridge Small vs. Janus Global Real | Clearbridge Small vs. Deutsche Real Estate | Clearbridge Small vs. Real Estate Ultrasector |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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