Correlation Between Legg Mason and Clearbridge Sustainability
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Clearbridge Sustainability 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 Clearbridge Sustainability into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Bw and Clearbridge Sustainability, you can compare the effects of market volatilities on Legg Mason and Clearbridge Sustainability 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 Clearbridge Sustainability. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Clearbridge Sustainability.
Diversification Opportunities for Legg Mason and Clearbridge Sustainability
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legg and Clearbridge is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Clearbridge Sustainability in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Sustainability 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 Bw are associated (or correlated) with Clearbridge Sustainability. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Sustainability has no effect on the direction of Legg Mason i.e., Legg Mason and Clearbridge Sustainability go up and down completely randomly.
Pair Corralation between Legg Mason and Clearbridge Sustainability
Assuming the 90 days horizon Legg Mason Bw is expected to under-perform the Clearbridge Sustainability. But the mutual fund apears to be less risky and, when comparing its historical volatility, Legg Mason Bw is 1.42 times less risky than Clearbridge Sustainability. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Clearbridge Sustainability is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,730 in Clearbridge Sustainability on August 30, 2024 and sell it today you would earn a total of 108.00 from holding Clearbridge Sustainability or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Clearbridge Sustainability
Performance |
| Timeline |
| Legg Mason Bw |
| Clearbridge Sustainability |
Legg Mason and Clearbridge Sustainability Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Clearbridge Sustainability
The main advantage of trading using opposite Legg Mason and Clearbridge Sustainability positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Clearbridge Sustainability 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 Clearbridge Sustainability will offset losses from the drop in Clearbridge Sustainability's long position.| Legg Mason vs. Clearbridge Aggressive Growth | Legg Mason vs. Clearbridge Small Cap | Legg Mason vs. Qs International Equity | Legg Mason vs. Clearbridge Appreciation 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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