Correlation Between Legg Mason and Ridgeworth Silvant
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Ridgeworth Silvant 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 Ridgeworth Silvant 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 Ridgeworth Silvant Large, you can compare the effects of market volatilities on Legg Mason and Ridgeworth Silvant 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 Ridgeworth Silvant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Ridgeworth Silvant.
Diversification Opportunities for Legg Mason and Ridgeworth Silvant
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Ridgeworth is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Ridgeworth Silvant Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridgeworth Silvant Large 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 Ridgeworth Silvant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridgeworth Silvant Large has no effect on the direction of Legg Mason i.e., Legg Mason and Ridgeworth Silvant go up and down completely randomly.
Pair Corralation between Legg Mason and Ridgeworth Silvant
Assuming the 90 days horizon Legg Mason is expected to generate 1.28 times less return on investment than Ridgeworth Silvant. But when comparing it to its historical volatility, Legg Mason Bw is 1.48 times less risky than Ridgeworth Silvant. It trades about 0.12 of its potential returns per unit of risk. Ridgeworth Silvant Large is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,052 in Ridgeworth Silvant Large on August 31, 2024 and sell it today you would earn a total of 525.00 from holding Ridgeworth Silvant Large or generate 49.9% 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. Ridgeworth Silvant Large
Performance |
| Timeline |
| Legg Mason Bw |
| Ridgeworth Silvant Large |
Legg Mason and Ridgeworth Silvant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Ridgeworth Silvant
The main advantage of trading using opposite Legg Mason and Ridgeworth Silvant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Ridgeworth Silvant 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 Ridgeworth Silvant will offset losses from the drop in Ridgeworth Silvant's long position.| Legg Mason vs. Dodge Cox Stock | Legg Mason vs. American Mutual Fund | Legg Mason vs. American Funds American | Legg Mason vs. American Funds American |
| Ridgeworth Silvant vs. T Rowe Price | Ridgeworth Silvant vs. Legg Mason Bw | Ridgeworth Silvant vs. John Hancock Investment | Ridgeworth Silvant vs. American Mutual Fund |
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.
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