Correlation Between Legg Mason and Invesco Low
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Invesco Low 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 Invesco Low 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 Invesco Low Volatility, you can compare the effects of market volatilities on Legg Mason and Invesco Low 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 Invesco Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Invesco Low.
Diversification Opportunities for Legg Mason and Invesco Low
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Invesco is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Invesco Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Low Volatility 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 Invesco Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Low Volatility has no effect on the direction of Legg Mason i.e., Legg Mason and Invesco Low go up and down completely randomly.
Pair Corralation between Legg Mason and Invesco Low
Assuming the 90 days horizon Legg Mason Bw is expected to generate 1.29 times more return on investment than Invesco Low. However, Legg Mason is 1.29 times more volatile than Invesco Low Volatility. It trades about 0.16 of its potential returns per unit of risk. Invesco Low Volatility is currently generating about 0.14 per unit of risk. If you would invest 2,039 in Legg Mason Bw on September 2, 2024 and sell it today you would earn a total of 349.00 from holding Legg Mason Bw or generate 17.12% 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. Invesco Low Volatility
Performance |
| Timeline |
| Legg Mason Bw |
| Invesco Low Volatility |
Legg Mason and Invesco Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Invesco Low
The main advantage of trading using opposite Legg Mason and Invesco Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Invesco Low 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 Invesco Low will offset losses from the drop in Invesco Low'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 |
| Invesco Low vs. Invesco Municipal Income | Invesco Low vs. Invesco Municipal Income | Invesco Low vs. Invesco Municipal Income | Invesco Low vs. Oppenheimer Rising Dividends |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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