Correlation Between Legg Mason and Catalyst/millburn
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Catalyst/millburn 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 Catalyst/millburn 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 Catalystmillburn Hedge Strategy, you can compare the effects of market volatilities on Legg Mason and Catalyst/millburn 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 Catalyst/millburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Catalyst/millburn.
Diversification Opportunities for Legg Mason and Catalyst/millburn
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legg and Catalyst/millburn is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge 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 Catalyst/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of Legg Mason i.e., Legg Mason and Catalyst/millburn go up and down completely randomly.
Pair Corralation between Legg Mason and Catalyst/millburn
Assuming the 90 days horizon Legg Mason Global is expected to generate 0.34 times more return on investment than Catalyst/millburn. However, Legg Mason Global is 2.98 times less risky than Catalyst/millburn. It trades about 0.11 of its potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about 0.03 per unit of risk. If you would invest 930.00 in Legg Mason Global on September 5, 2024 and sell it today you would earn a total of 29.00 from holding Legg Mason Global or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Legg Mason Global vs. Catalystmillburn Hedge Strateg
Performance |
| Timeline |
| Legg Mason Global |
| Catalystmillburn Hedge |
Legg Mason and Catalyst/millburn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Catalyst/millburn
The main advantage of trading using opposite Legg Mason and Catalyst/millburn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Catalyst/millburn 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 Catalyst/millburn will offset losses from the drop in Catalyst/millburn's long position.| Legg Mason vs. Gmo High Yield | Legg Mason vs. Prudential High Yield | Legg Mason vs. Dunham High Yield | Legg Mason vs. Lord Abbett High |
| Catalyst/millburn vs. Volumetric Fund Volumetric | Catalyst/millburn vs. Federated Mdt Large | Catalyst/millburn vs. Nationwide Global Equity | Catalyst/millburn vs. Rbb Fund |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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