Correlation Between Legg Mason and Great West
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Great West 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 Great West 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 Great West Loomis Sayles, you can compare the effects of market volatilities on Legg Mason and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Great West.
Diversification Opportunities for Legg Mason and Great West
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Great is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Great West Loomis Sayles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Loomis 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Loomis has no effect on the direction of Legg Mason i.e., Legg Mason and Great West go up and down completely randomly.
Pair Corralation between Legg Mason and Great West
Assuming the 90 days horizon Legg Mason is expected to generate 3.8 times less return on investment than Great West. But when comparing it to its historical volatility, Legg Mason Global is 4.77 times less risky than Great West. It trades about 0.07 of its potential returns per unit of risk. Great West Loomis Sayles is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,434 in Great West Loomis Sayles on November 3, 2024 and sell it today you would earn a total of 539.00 from holding Great West Loomis Sayles or generate 15.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Great West Loomis Sayles
Performance |
| Timeline |
| Legg Mason Global |
| Great West Loomis |
Legg Mason and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Great West
The main advantage of trading using opposite Legg Mason and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Legg Mason vs. Lord Abbett Diversified | Legg Mason vs. Lord Abbett Diversified | Legg Mason vs. Fulcrum Diversified Absolute | Legg Mason vs. Wells Fargo Diversified |
| Great West vs. Multisector Bond Sma | Great West vs. Franklin Adjustable Government | Great West vs. T Rowe Price | Great West vs. Siit High Yield |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |