Correlation Between Legg Mason and Invesco Short
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Invesco Short 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 Invesco Short 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 Invesco Short Term, you can compare the effects of market volatilities on Legg Mason and Invesco Short 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 Invesco Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Invesco Short.
Diversification Opportunities for Legg Mason and Invesco Short
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and INVESCO is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Invesco Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Short Term 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 Invesco Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Short Term has no effect on the direction of Legg Mason i.e., Legg Mason and Invesco Short go up and down completely randomly.
Pair Corralation between Legg Mason and Invesco Short
Assuming the 90 days horizon Legg Mason Bw is expected to generate 8.51 times more return on investment than Invesco Short. However, Legg Mason is 8.51 times more volatile than Invesco Short Term. It trades about 0.22 of its potential returns per unit of risk. Invesco Short Term is currently generating about 0.05 per unit of risk. If you would invest 2,216 in Legg Mason Bw on August 28, 2024 and sell it today you would earn a total of 105.00 from holding Legg Mason Bw or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Invesco Short Term
Performance |
| Timeline |
| Legg Mason Bw |
| Invesco Short Term |
Legg Mason and Invesco Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Invesco Short
The main advantage of trading using opposite Legg Mason and Invesco Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Invesco Short 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 Invesco Short will offset losses from the drop in Invesco Short'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 |
| Invesco Short vs. Invesco Municipal Income | Invesco Short vs. Invesco Municipal Income | Invesco Short vs. Invesco Municipal Income | Invesco Short vs. Oppenheimer Rising Dividends |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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