Correlation Between Legg Mason and Aqr Large
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Aqr 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 Aqr 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 Aqr Large Cap, you can compare the effects of market volatilities on Legg Mason and Aqr 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 Aqr Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Aqr Large.
Diversification Opportunities for Legg Mason and Aqr Large
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Aqr is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Aqr Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr 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 Aqr Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Large Cap has no effect on the direction of Legg Mason i.e., Legg Mason and Aqr Large go up and down completely randomly.
Pair Corralation between Legg Mason and Aqr Large
Assuming the 90 days horizon Legg Mason is expected to generate 1.05 times less return on investment than Aqr Large. In addition to that, Legg Mason is 1.16 times more volatile than Aqr Large Cap. It trades about 0.31 of its total potential returns per unit of risk. Aqr Large Cap is currently generating about 0.37 per unit of volatility. If you would invest 2,034 in Aqr Large Cap on September 1, 2024 and sell it today you would earn a total of 144.00 from holding Aqr Large Cap or generate 7.08% 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. Aqr Large Cap
Performance |
| Timeline |
| Legg Mason Bw |
| Aqr Large Cap |
Legg Mason and Aqr Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Aqr Large
The main advantage of trading using opposite Legg Mason and Aqr Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Aqr 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 Aqr Large will offset losses from the drop in Aqr Large's long position.| Legg Mason vs. Icon Financial Fund | Legg Mason vs. Transamerica Financial Life | Legg Mason vs. Royce Global Financial | Legg Mason vs. Vanguard Financials Index |
| Aqr Large vs. American Century Investment | Aqr Large vs. Prudential Government Money | Aqr Large vs. T Rowe Price | Aqr Large vs. Bbh Trust |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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