Correlation Between Legg Mason and Multi Manager
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Multi Manager 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 Multi Manager 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 Multi Manager Directional Alternative, you can compare the effects of market volatilities on Legg Mason and Multi Manager 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 Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Multi Manager.
Diversification Opportunities for Legg Mason and Multi Manager
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and MULTI is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Multi Manager Directional Alte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Direct 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 Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Direct has no effect on the direction of Legg Mason i.e., Legg Mason and Multi Manager go up and down completely randomly.
Pair Corralation between Legg Mason and Multi Manager
Assuming the 90 days horizon Legg Mason Bw is expected to generate 1.53 times more return on investment than Multi Manager. However, Legg Mason is 1.53 times more volatile than Multi Manager Directional Alternative. It trades about 0.17 of its potential returns per unit of risk. Multi Manager Directional Alternative is currently generating about 0.21 per unit of risk. If you would invest 1,648 in Legg Mason Bw on August 25, 2024 and sell it today you would earn a total of 652.00 from holding Legg Mason Bw or generate 39.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Legg Mason Bw vs. Multi Manager Directional Alte
Performance |
| Timeline |
| Legg Mason Bw |
| Multi Manager Direct |
Legg Mason and Multi Manager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Multi Manager
The main advantage of trading using opposite Legg Mason and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Multi Manager 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 Multi Manager will offset losses from the drop in Multi Manager's long position.| Legg Mason vs. Clearbridge Aggressive Growth | Legg Mason vs. Clearbridge Small Cap | Legg Mason vs. Qs International Equity | Legg Mason vs. Clearbridge Appreciation Fund |
| Multi Manager vs. Multisector Bond Sma | Multi Manager vs. California Bond Fund | Multi Manager vs. Maryland Tax Free Bond | Multi Manager vs. Rationalpier 88 Convertible |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |