Correlation Between Legg Mason and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Touchstone Large 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 Touchstone Large 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 Touchstone Large Cap, you can compare the effects of market volatilities on Legg Mason and Touchstone Large 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 Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Touchstone Large.
Diversification Opportunities for Legg Mason and Touchstone Large
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Touchstone is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap 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 Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Legg Mason i.e., Legg Mason and Touchstone Large go up and down completely randomly.
Pair Corralation between Legg Mason and Touchstone Large
Assuming the 90 days horizon Legg Mason Bw is expected to generate 1.23 times more return on investment than Touchstone Large. However, Legg Mason is 1.23 times more volatile than Touchstone Large Cap. It trades about 0.17 of its potential returns per unit of risk. Touchstone Large Cap is currently generating about 0.19 per unit of risk. If you would invest 2,191 in Legg Mason Bw on September 2, 2024 and sell it today you would earn a total of 189.00 from holding Legg Mason Bw or generate 8.63% 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. Touchstone Large Cap
Performance |
| Timeline |
| Legg Mason Bw |
| Touchstone Large Cap |
Legg Mason and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Touchstone Large
The main advantage of trading using opposite Legg Mason and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Touchstone Large 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 Touchstone Large will offset losses from the drop in Touchstone Large'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 |
| Touchstone Large vs. Vanguard Small Cap Value | Touchstone Large vs. Amg River Road | Touchstone Large vs. William Blair Small | Touchstone Large vs. Omni Small Cap Value |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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