Correlation Between Legg Mason and Simt Real
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Simt Real 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 Simt Real 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 Simt Real Estate, you can compare the effects of market volatilities on Legg Mason and Simt Real 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 Simt Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Simt Real.
Diversification Opportunities for Legg Mason and Simt Real
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Simt is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Simt Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Real Estate 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 Simt Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Real Estate has no effect on the direction of Legg Mason i.e., Legg Mason and Simt Real go up and down completely randomly.
Pair Corralation between Legg Mason and Simt Real
Assuming the 90 days horizon Legg Mason is expected to generate 2.06 times less return on investment than Simt Real. But when comparing it to its historical volatility, Legg Mason Global is 5.42 times less risky than Simt Real. It trades about 0.27 of its potential returns per unit of risk. Simt Real Estate is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,585 in Simt Real Estate on October 29, 2024 and sell it today you would earn a total of 34.00 from holding Simt Real Estate or generate 2.15% 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. Simt Real Estate
Performance |
| Timeline |
| Legg Mason Global |
| Simt Real Estate |
Legg Mason and Simt Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Simt Real
The main advantage of trading using opposite Legg Mason and Simt Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Simt Real 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 Simt Real will offset losses from the drop in Simt Real's long position.| Legg Mason vs. Versatile Bond Portfolio | Legg Mason vs. Artisan High Income | Legg Mason vs. Blrc Sgy Mnp | Legg Mason vs. Ab Bond Inflation |
| Simt Real vs. Nasdaq 100 Index Fund | Simt Real vs. Rbb Fund | Simt Real vs. Nuveen Mid Cap | Simt Real vs. Credit Suisse Floating |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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