Correlation Between Legg Mason and Manning Napier
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Manning Napier 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 Manning Napier 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 Manning Napier Callodine, you can compare the effects of market volatilities on Legg Mason and Manning Napier 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 Manning Napier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Manning Napier.
Diversification Opportunities for Legg Mason and Manning Napier
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Manning is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Manning Napier Callodine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Callodine 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 Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Callodine has no effect on the direction of Legg Mason i.e., Legg Mason and Manning Napier go up and down completely randomly.
Pair Corralation between Legg Mason and Manning Napier
Assuming the 90 days horizon Legg Mason is expected to generate 1.45 times less return on investment than Manning Napier. But when comparing it to its historical volatility, Legg Mason Bw is 1.27 times less risky than Manning Napier. It trades about 0.03 of its potential returns per unit of risk. Manning Napier Callodine is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,032 in Manning Napier Callodine on January 12, 2025 and sell it today you would earn a total of 125.00 from holding Manning Napier Callodine or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 74.55% |
| Values | Daily Returns |
Legg Mason Bw vs. Manning Napier Callodine
Performance |
| Timeline |
| Legg Mason Bw |
| Manning Napier Callodine |
Legg Mason and Manning Napier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Manning Napier
The main advantage of trading using opposite Legg Mason and Manning Napier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Manning Napier 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 Manning Napier will offset losses from the drop in Manning Napier's long position.| Legg Mason vs. Franklin Mutual Beacon | Legg Mason vs. Templeton Developing Markets | Legg Mason vs. Franklin Mutual Global | Legg Mason vs. Franklin Mutual Global |
| Manning Napier vs. Invesco Global Health | Manning Napier vs. Health Care Ultrasector | Manning Napier vs. Blackrock Health Sciences | Manning Napier vs. Schwab Health Care |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |