Correlation Between Legg Mason and Icon Information
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Icon Information 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 Icon Information 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 Icon Information Technology, you can compare the effects of market volatilities on Legg Mason and Icon Information 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 Icon Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Icon Information.
Diversification Opportunities for Legg Mason and Icon Information
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Legg and Icon is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Icon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Information Tec 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 Icon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Information Tec has no effect on the direction of Legg Mason i.e., Legg Mason and Icon Information go up and down completely randomly.
Pair Corralation between Legg Mason and Icon Information
Assuming the 90 days horizon Legg Mason Global is expected to generate 0.2 times more return on investment than Icon Information. However, Legg Mason Global is 5.04 times less risky than Icon Information. It trades about -0.03 of its potential returns per unit of risk. Icon Information Technology is currently generating about -0.03 per unit of risk. If you would invest 925.00 in Legg Mason Global on October 26, 2024 and sell it today you would lose (3.00) from holding Legg Mason Global or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Icon Information Technology
Performance |
| Timeline |
| Legg Mason Global |
| Icon Information Tec |
Legg Mason and Icon Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Icon Information
The main advantage of trading using opposite Legg Mason and Icon Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Icon Information 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 Icon Information will offset losses from the drop in Icon Information's long position.| Legg Mason vs. Tiaa Cref Inflation Linked Bond | Legg Mason vs. Guggenheim Managed Futures | Legg Mason vs. Short Duration Inflation | Legg Mason vs. Abbey Capital Futures |
| Icon Information vs. Rbc Global Opportunities | Icon Information vs. Aqr Global Macro | Icon Information vs. Templeton Global Balanced | Icon Information vs. Legg Mason Global |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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