Correlation Between Legg Mason and Alliancebernstein
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Alliancebernstein 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 Alliancebernstein into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Global and Alliancebernstein Global High, you can compare the effects of market volatilities on Legg Mason and Alliancebernstein 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 Alliancebernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Alliancebernstein.
Diversification Opportunities for Legg Mason and Alliancebernstein
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Alliancebernstein is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Alliancebernstein Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein 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 Global are associated (or correlated) with Alliancebernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliancebernstein has no effect on the direction of Legg Mason i.e., Legg Mason and Alliancebernstein go up and down completely randomly.
Pair Corralation between Legg Mason and Alliancebernstein
Assuming the 90 days horizon Legg Mason is expected to generate 1.76 times less return on investment than Alliancebernstein. But when comparing it to its historical volatility, Legg Mason Global is 1.82 times less risky than Alliancebernstein. It trades about 0.21 of its potential returns per unit of risk. Alliancebernstein Global High is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,079 in Alliancebernstein Global High on September 4, 2024 and sell it today you would earn a total of 22.00 from holding Alliancebernstein Global High or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Alliancebernstein Global High
Performance |
| Timeline |
| Legg Mason Global |
| Alliancebernstein |
Legg Mason and Alliancebernstein Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Alliancebernstein
The main advantage of trading using opposite Legg Mason and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Alliancebernstein 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 Alliancebernstein will offset losses from the drop in Alliancebernstein's long position.| Legg Mason vs. Invesco Global Health | Legg Mason vs. Baron Health Care | Legg Mason vs. Deutsche Health And | Legg Mason vs. Fidelity Advisor Health |
| Alliancebernstein vs. Doubleline Yield Opportunities | Alliancebernstein vs. Highland Floating Rate | Alliancebernstein vs. Doubleline Opportunistic Credit | Alliancebernstein vs. Western Asset Emerging |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| 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 | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |