Correlation Between Legg Mason and Lifex Income
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Lifex Income 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 Lifex Income 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 Lifex Income, you can compare the effects of market volatilities on Legg Mason and Lifex Income 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 Lifex Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Lifex Income.
Diversification Opportunities for Legg Mason and Lifex Income
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Lifex is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Lifex Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Income 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 Lifex Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Income has no effect on the direction of Legg Mason i.e., Legg Mason and Lifex Income go up and down completely randomly.
Pair Corralation between Legg Mason and Lifex Income
Assuming the 90 days horizon Legg Mason is expected to generate 1.53 times less return on investment than Lifex Income. But when comparing it to its historical volatility, Legg Mason Global is 3.53 times less risky than Lifex Income. It trades about 0.26 of its potential returns per unit of risk. Lifex Income is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,876 in Lifex Income on September 13, 2024 and sell it today you would earn a total of 31.00 from holding Lifex Income or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Legg Mason Global vs. Lifex Income
Performance |
| Timeline |
| Legg Mason Global |
| Lifex Income |
Legg Mason and Lifex Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Lifex Income
The main advantage of trading using opposite Legg Mason and Lifex Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Lifex Income 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 Lifex Income will offset losses from the drop in Lifex Income'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 |
| Lifex Income vs. Stone Ridge High | Lifex Income vs. Stone Ridge High | Lifex Income vs. Davidson Multi Cap Equity | Lifex Income vs. Fidelity Growth Income |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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