Correlation Between Legg Mason and Virtus Senior
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Virtus Senior 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 Virtus Senior 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 Virtus Senior Floating, you can compare the effects of market volatilities on Legg Mason and Virtus Senior 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 Virtus Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Virtus Senior.
Diversification Opportunities for Legg Mason and Virtus Senior
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Virtus is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Virtus Senior Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Senior Floating 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 Virtus Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Senior Floating has no effect on the direction of Legg Mason i.e., Legg Mason and Virtus Senior go up and down completely randomly.
Pair Corralation between Legg Mason and Virtus Senior
Assuming the 90 days horizon Legg Mason Bw is expected to generate 18.38 times more return on investment than Virtus Senior. However, Legg Mason is 18.38 times more volatile than Virtus Senior Floating. It trades about 0.32 of its potential returns per unit of risk. Virtus Senior Floating is currently generating about 0.3 per unit of risk. If you would invest 2,236 in Legg Mason Bw on September 1, 2024 and sell it today you would earn a total of 152.00 from holding Legg Mason Bw or generate 6.8% 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. Virtus Senior Floating
Performance |
| Timeline |
| Legg Mason Bw |
| Virtus Senior Floating |
Legg Mason and Virtus Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Virtus Senior
The main advantage of trading using opposite Legg Mason and Virtus Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Virtus Senior 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 Virtus Senior will offset losses from the drop in Virtus Senior's long position.| Legg Mason vs. Rbb Fund | Legg Mason vs. Aam Select Income | Legg Mason vs. Scharf Global Opportunity | Legg Mason vs. Falcon Focus Scv |
| Virtus Senior vs. Old Westbury Large | Virtus Senior vs. Alternative Asset Allocation | Virtus Senior vs. Touchstone Large Cap | Virtus Senior vs. Legg Mason Bw |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |