Correlation Between Legg Mason and Vaughan Nelson
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Vaughan Nelson 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 Vaughan Nelson 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 Vaughan Nelson Select, you can compare the effects of market volatilities on Legg Mason and Vaughan Nelson 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 Vaughan Nelson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Vaughan Nelson.
Diversification Opportunities for Legg Mason and Vaughan Nelson
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Vaughan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Vaughan Nelson Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaughan Nelson Select 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 Vaughan Nelson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaughan Nelson Select has no effect on the direction of Legg Mason i.e., Legg Mason and Vaughan Nelson go up and down completely randomly.
Pair Corralation between Legg Mason and Vaughan Nelson
Assuming the 90 days horizon Legg Mason Bw is expected to generate 0.8 times more return on investment than Vaughan Nelson. However, Legg Mason Bw is 1.25 times less risky than Vaughan Nelson. It trades about 0.15 of its potential returns per unit of risk. Vaughan Nelson Select is currently generating about 0.06 per unit of risk. If you would invest 2,025 in Legg Mason Bw on September 3, 2024 and sell it today you would earn a total of 355.00 from holding Legg Mason Bw or generate 17.53% 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. Vaughan Nelson Select
Performance |
| Timeline |
| Legg Mason Bw |
| Vaughan Nelson Select |
Legg Mason and Vaughan Nelson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Vaughan Nelson
The main advantage of trading using opposite Legg Mason and Vaughan Nelson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Vaughan Nelson 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 Vaughan Nelson will offset losses from the drop in Vaughan Nelson's long position.| Legg Mason vs. Ultramid Cap Profund Ultramid Cap | Legg Mason vs. Hennessy Nerstone Mid | Legg Mason vs. Boston Partners Small | Legg Mason vs. Fpa Queens Road |
| Vaughan Nelson vs. Prudential Real Estate | Vaughan Nelson vs. Fidelity Real Estate | Vaughan Nelson vs. Guggenheim Risk Managed | Vaughan Nelson vs. Pender Real Estate |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Transaction History View history of all your transactions and understand their impact on performance |