Correlation Between Legg Mason and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Harding Loevner 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 Harding Loevner 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 Harding Loevner Global, you can compare the effects of market volatilities on Legg Mason and Harding Loevner 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 Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Harding Loevner.
Diversification Opportunities for Legg Mason and Harding Loevner
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and Harding is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Harding Loevner Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Global 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 Harding Loevner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harding Loevner Global has no effect on the direction of Legg Mason i.e., Legg Mason and Harding Loevner go up and down completely randomly.
Pair Corralation between Legg Mason and Harding Loevner
Assuming the 90 days horizon Legg Mason Global is expected to generate 0.28 times more return on investment than Harding Loevner. However, Legg Mason Global is 3.52 times less risky than Harding Loevner. It trades about -0.32 of its potential returns per unit of risk. Harding Loevner Global is currently generating about -0.22 per unit of risk. If you would invest 927.00 in Legg Mason Global on October 12, 2024 and sell it today you would lose (14.00) from holding Legg Mason Global or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Harding Loevner Global
Performance |
| Timeline |
| Legg Mason Global |
| Harding Loevner Global |
Legg Mason and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Harding Loevner
The main advantage of trading using opposite Legg Mason and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Harding Loevner 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 Harding Loevner will offset losses from the drop in Harding Loevner's long position.| Legg Mason vs. Blackrock Health Sciences | Legg Mason vs. Invesco Global Health | Legg Mason vs. Prudential Health Sciences | Legg Mason vs. Eventide Healthcare Life |
| Harding Loevner vs. Harding Loevner Funds | Harding Loevner vs. Harding Loevner Emerging | Harding Loevner vs. Harding Loevner Frontier | Harding Loevner vs. Harding Loevner International |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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