Correlation Between Legg Mason and Invesco High
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Invesco High 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 High 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 Invesco High Yield, you can compare the effects of market volatilities on Legg Mason and Invesco High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Invesco High.
Diversification Opportunities for Legg Mason and Invesco High
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Invesco is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Invesco High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High Yield 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 Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Yield has no effect on the direction of Legg Mason i.e., Legg Mason and Invesco High go up and down completely randomly.
Pair Corralation between Legg Mason and Invesco High
Assuming the 90 days horizon Legg Mason is expected to generate 2.63 times less return on investment than Invesco High. In addition to that, Legg Mason is 1.33 times more volatile than Invesco High Yield. It trades about 0.06 of its total potential returns per unit of risk. Invesco High Yield is currently generating about 0.22 per unit of volatility. If you would invest 355.00 in Invesco High Yield on August 27, 2024 and sell it today you would earn a total of 3.00 from holding Invesco High Yield or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Invesco High Yield
Performance |
| Timeline |
| Legg Mason Global |
| Invesco High Yield |
Legg Mason and Invesco High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Invesco High
The main advantage of trading using opposite Legg Mason and Invesco High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Invesco High 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 High will offset losses from the drop in Invesco High's long position.| Legg Mason vs. Icon Information Technology | Legg Mason vs. Global Technology Portfolio | Legg Mason vs. Red Oak Technology | Legg Mason vs. Vanguard Information Technology |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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