Correlation Between Legg Mason and Pioneer Strategic
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Pioneer Strategic 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 Pioneer Strategic 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 Pioneer Strategic Income, you can compare the effects of market volatilities on Legg Mason and Pioneer Strategic 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 Pioneer Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Pioneer Strategic.
Diversification Opportunities for Legg Mason and Pioneer Strategic
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legg and Pioneer is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Pioneer Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Strategic Income 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 Pioneer Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Strategic Income has no effect on the direction of Legg Mason i.e., Legg Mason and Pioneer Strategic go up and down completely randomly.
Pair Corralation between Legg Mason and Pioneer Strategic
Assuming the 90 days horizon Legg Mason Bw is expected to generate 2.68 times more return on investment than Pioneer Strategic. However, Legg Mason is 2.68 times more volatile than Pioneer Strategic Income. It trades about 0.17 of its potential returns per unit of risk. Pioneer Strategic Income is currently generating about -0.02 per unit of risk. If you would invest 2,196 in Legg Mason Bw on September 2, 2024 and sell it today you would earn a total of 192.00 from holding Legg Mason Bw or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Pioneer Strategic Income
Performance |
| Timeline |
| Legg Mason Bw |
| Pioneer Strategic Income |
Legg Mason and Pioneer Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Pioneer Strategic
The main advantage of trading using opposite Legg Mason and Pioneer Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Pioneer Strategic 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 Pioneer Strategic will offset losses from the drop in Pioneer Strategic'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 |
| Pioneer Strategic vs. Columbia Real Estate | Pioneer Strategic vs. Dunham Real Estate | Pioneer Strategic vs. Msif Real Estate | Pioneer Strategic vs. Simt Real Estate |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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