Correlation Between Legg Mason and Transamerica Smallmid
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Transamerica Smallmid 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 Transamerica Smallmid 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 Transamerica Smallmid Cap, you can compare the effects of market volatilities on Legg Mason and Transamerica Smallmid 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 Transamerica Smallmid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Transamerica Smallmid.
Diversification Opportunities for Legg Mason and Transamerica Smallmid
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legg and Transamerica is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Transamerica Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Smallmid Cap 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 Transamerica Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Smallmid Cap has no effect on the direction of Legg Mason i.e., Legg Mason and Transamerica Smallmid go up and down completely randomly.
Pair Corralation between Legg Mason and Transamerica Smallmid
Assuming the 90 days horizon Legg Mason Global is expected to generate 0.29 times more return on investment than Transamerica Smallmid. However, Legg Mason Global is 3.41 times less risky than Transamerica Smallmid. It trades about 0.26 of its potential returns per unit of risk. Transamerica Smallmid Cap is currently generating about -0.02 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Transamerica Smallmid Cap
Performance |
| Timeline |
| Legg Mason Global |
| Transamerica Smallmid Cap |
Legg Mason and Transamerica Smallmid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Transamerica Smallmid
The main advantage of trading using opposite Legg Mason and Transamerica Smallmid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Transamerica Smallmid 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 Transamerica Smallmid will offset losses from the drop in Transamerica Smallmid'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 |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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