Correlation Between Legg Mason and Virtus Nfj
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Virtus Nfj 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 Virtus Nfj 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 Virtus Nfj Large Cap, you can compare the effects of market volatilities on Legg Mason and Virtus Nfj 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 Virtus Nfj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Virtus Nfj.
Diversification Opportunities for Legg Mason and Virtus Nfj
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Virtus is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Virtus Nfj Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Nfj 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 Virtus Nfj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Nfj Large has no effect on the direction of Legg Mason i.e., Legg Mason and Virtus Nfj go up and down completely randomly.
Pair Corralation between Legg Mason and Virtus Nfj
Assuming the 90 days horizon Legg Mason Bw is expected to generate 1.26 times more return on investment than Virtus Nfj. However, Legg Mason is 1.26 times more volatile than Virtus Nfj Large Cap. It trades about 0.28 of its potential returns per unit of risk. Virtus Nfj Large Cap is currently generating about 0.24 per unit of risk. If you would invest 2,236 in Legg Mason Bw on August 31, 2024 and sell it today you would earn a total of 140.00 from holding Legg Mason Bw or generate 6.26% 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. Virtus Nfj Large Cap
Performance |
| Timeline |
| Legg Mason Bw |
| Virtus Nfj Large |
Legg Mason and Virtus Nfj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Virtus Nfj
The main advantage of trading using opposite Legg Mason and Virtus Nfj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Virtus Nfj 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 Virtus Nfj will offset losses from the drop in Virtus Nfj's long position.| Legg Mason vs. Vanguard Value Index | Legg Mason vs. Dodge Cox Stock | Legg Mason vs. American Mutual Fund | Legg Mason vs. American Funds American |
| Virtus Nfj vs. Vanguard Value Index | Virtus Nfj vs. Dodge Cox Stock | Virtus Nfj vs. American Mutual Fund | Virtus Nfj vs. American Funds American |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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