Correlation Between Legg Mason and Nuveen Us
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Nuveen Us 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 Nuveen Us 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 Nuveen Infrastructure Income, you can compare the effects of market volatilities on Legg Mason and Nuveen Us 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 Nuveen Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Nuveen Us.
Diversification Opportunities for Legg Mason and Nuveen Us
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Nuveen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Nuveen Infrastructure Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Infrastructure 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 Nuveen Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Infrastructure has no effect on the direction of Legg Mason i.e., Legg Mason and Nuveen Us go up and down completely randomly.
Pair Corralation between Legg Mason and Nuveen Us
Assuming the 90 days horizon Legg Mason Bw is expected to generate 25.21 times more return on investment than Nuveen Us. However, Legg Mason is 25.21 times more volatile than Nuveen Infrastructure Income. It trades about 0.28 of its potential returns per unit of risk. Nuveen Infrastructure Income is currently generating about 0.46 per unit of risk. If you would invest 2,202 in Legg Mason Bw on August 31, 2024 and sell it today you would earn a total of 136.00 from holding Legg Mason Bw or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Nuveen Infrastructure Income
Performance |
| Timeline |
| Legg Mason Bw |
| Nuveen Infrastructure |
Legg Mason and Nuveen Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Nuveen Us
The main advantage of trading using opposite Legg Mason and Nuveen Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Nuveen Us 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 Nuveen Us will offset losses from the drop in Nuveen Us' long position.The idea behind Legg Mason Bw and Nuveen Infrastructure Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nuveen Us vs. Blackrock Financial Institutions | Nuveen Us vs. Vanguard Financials Index | Nuveen Us vs. Gabelli Global Financial | Nuveen Us vs. 1919 Financial Services |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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