Correlation Between Legg Mason and Columbia Dividend
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Columbia Dividend 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 Columbia Dividend 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 Columbia Dividend Income, you can compare the effects of market volatilities on Legg Mason and Columbia Dividend 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 Columbia Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Columbia Dividend.
Diversification Opportunities for Legg Mason and Columbia Dividend
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Columbia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Columbia Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Dividend 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 Columbia Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Dividend Income has no effect on the direction of Legg Mason i.e., Legg Mason and Columbia Dividend go up and down completely randomly.
Pair Corralation between Legg Mason and Columbia Dividend
Assuming the 90 days horizon Legg Mason Bw is expected to generate 1.27 times more return on investment than Columbia Dividend. However, Legg Mason is 1.27 times more volatile than Columbia Dividend Income. It trades about 0.16 of its potential returns per unit of risk. Columbia Dividend Income is currently generating about 0.16 per unit of risk. If you would invest 2,036 in Legg Mason Bw on September 2, 2024 and sell it today you would earn a total of 344.00 from holding Legg Mason Bw or generate 16.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.62% |
| Values | Daily Returns |
Legg Mason Bw vs. Columbia Dividend Income
Performance |
| Timeline |
| Legg Mason Bw |
| Columbia Dividend Income |
Legg Mason and Columbia Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Columbia Dividend
The main advantage of trading using opposite Legg Mason and Columbia Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Columbia Dividend 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 Columbia Dividend will offset losses from the drop in Columbia Dividend'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 |
| Columbia Dividend vs. Columbia Select Large Cap | Columbia Dividend vs. Federated Mdt Large | Columbia Dividend vs. Calvert Large Cap |
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 Stocks Directory module to find actively traded stocks across global markets.
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