Correlation Between Legg Mason and Northern Funds
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Northern Funds 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 Northern Funds 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 Northern Funds , you can compare the effects of market volatilities on Legg Mason and Northern Funds 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 Northern Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Northern Funds.
Diversification Opportunities for Legg Mason and Northern Funds
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legg and Northern is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Northern Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Funds 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 Northern Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Funds has no effect on the direction of Legg Mason i.e., Legg Mason and Northern Funds go up and down completely randomly.
Pair Corralation between Legg Mason and Northern Funds
If you would invest 953.00 in Legg Mason Global on September 12, 2024 and sell it today you would earn a total of 6.00 from holding Legg Mason Global or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Northern Funds
Performance |
| Timeline |
| Legg Mason Global |
| Northern Funds |
Legg Mason and Northern Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Northern Funds
The main advantage of trading using opposite Legg Mason and Northern Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Northern Funds 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 Northern Funds will offset losses from the drop in Northern Funds' long position.| Legg Mason vs. Ab Global Real | Legg Mason vs. Kinetics Global Fund | Legg Mason vs. Mirova Global Green | Legg Mason vs. Scharf Global Opportunity |
| Northern Funds vs. Goldman Sachs Clean | Northern Funds vs. Fidelity Advisor Gold | Northern Funds vs. Franklin Gold Precious | Northern Funds vs. Great West Goldman Sachs |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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