Correlation Between Legg Mason and Clearbridge Small
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Clearbridge Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Legg Mason and Clearbridge Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Clearbridge Small.
Diversification Opportunities for Legg Mason and Clearbridge Small
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legg and Clearbridge is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Clearbridge Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Small Cap has no effect on the direction of Legg Mason i.e., Legg Mason and Clearbridge Small go up and down completely randomly.
Pair Corralation between Legg Mason and Clearbridge Small
Assuming the 90 days horizon Legg Mason Bw is expected to under-perform the Clearbridge Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Legg Mason Bw is 2.43 times less risky than Clearbridge Small. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Clearbridge Small Cap is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 6,666 in Clearbridge Small Cap on August 30, 2024 and sell it today you would earn a total of 590.00 from holding Clearbridge Small Cap or generate 8.85% 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 Small Cap
Performance |
| Timeline |
| Legg Mason Bw |
| Clearbridge Small Cap |
Legg Mason and Clearbridge Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Clearbridge Small
The main advantage of trading using opposite Legg Mason and Clearbridge Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Clearbridge Small 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 Small will offset losses from the drop in Clearbridge Small's long position.| Legg Mason vs. Capital World Bond | Legg Mason vs. HUMANA INC | Legg Mason vs. Aquagold International | Legg Mason vs. Barloworld Ltd ADR |
| Clearbridge Small vs. Sterling Capital Stratton | Clearbridge Small vs. Us Real Estate | Clearbridge Small vs. Commonwealth Real Estate | Clearbridge Small vs. Dunham Real Estate |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |