Correlation Between Legg Mason and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Sterling Capital 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 Sterling Capital 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 Sterling Capital Ultra, you can compare the effects of market volatilities on Legg Mason and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Sterling Capital.
Diversification Opportunities for Legg Mason and Sterling Capital
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legg and Sterling is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Sterling Capital Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Ultra 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Ultra has no effect on the direction of Legg Mason i.e., Legg Mason and Sterling Capital go up and down completely randomly.
Pair Corralation between Legg Mason and Sterling Capital
Assuming the 90 days horizon Legg Mason is expected to generate 1.18 times less return on investment than Sterling Capital. In addition to that, Legg Mason is 4.21 times more volatile than Sterling Capital Ultra. It trades about 0.05 of its total potential returns per unit of risk. Sterling Capital Ultra is currently generating about 0.24 per unit of volatility. If you would invest 881.00 in Sterling Capital Ultra on September 4, 2024 and sell it today you would earn a total of 102.00 from holding Sterling Capital Ultra or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Sterling Capital Ultra
Performance |
| Timeline |
| Legg Mason Global |
| Sterling Capital Ultra |
Legg Mason and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Sterling Capital
The main advantage of trading using opposite Legg Mason and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital'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 |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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