Correlation Between Legg Mason and Voya Short
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Voya Short 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 Voya Short 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 Voya Short Term, you can compare the effects of market volatilities on Legg Mason and Voya Short 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 Voya Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Voya Short.
Diversification Opportunities for Legg Mason and Voya Short
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Voya is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Voya Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Short Term 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 Voya Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Short Term has no effect on the direction of Legg Mason i.e., Legg Mason and Voya Short go up and down completely randomly.
Pair Corralation between Legg Mason and Voya Short
Assuming the 90 days horizon Legg Mason Global is expected to generate 1.35 times more return on investment than Voya Short. However, Legg Mason is 1.35 times more volatile than Voya Short Term. It trades about 0.26 of its potential returns per unit of risk. Voya Short Term is currently generating about 0.24 per unit of risk. If you would invest 949.00 in Legg Mason Global on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Legg Mason Global or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Legg Mason Global vs. Voya Short Term
Performance |
| Timeline |
| Legg Mason Global |
| Voya Short Term |
Legg Mason and Voya Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Voya Short
The main advantage of trading using opposite Legg Mason and Voya Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Voya Short 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 Voya Short will offset losses from the drop in Voya Short's long position.| Legg Mason vs. Calamos Global Equity | Legg Mason vs. Gmo Global Equity | Legg Mason vs. Qs Global Equity | Legg Mason vs. Touchstone International Equity |
| Voya Short vs. Voya Bond Index | Voya Short vs. Voya Bond Index | Voya Short vs. Voya Limited Maturity | Voya Short vs. Voya Limited Maturity |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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