Correlation Between Legg Mason and Clearbridge Value
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Clearbridge Value 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 Value 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 Value Trust, you can compare the effects of market volatilities on Legg Mason and Clearbridge Value 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 Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Clearbridge Value.
Diversification Opportunities for Legg Mason and Clearbridge Value
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legg and Clearbridge is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Clearbridge Value Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Value Trust 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 Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Value Trust has no effect on the direction of Legg Mason i.e., Legg Mason and Clearbridge Value go up and down completely randomly.
Pair Corralation between Legg Mason and Clearbridge Value
Assuming the 90 days horizon Legg Mason Bw is expected to under-perform the Clearbridge Value. But the mutual fund apears to be less risky and, when comparing its historical volatility, Legg Mason Bw is 1.77 times less risky than Clearbridge Value. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Clearbridge Value Trust is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 13,040 in Clearbridge Value Trust on August 29, 2024 and sell it today you would earn a total of 619.00 from holding Clearbridge Value Trust or generate 4.75% 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 Value Trust
Performance |
| Timeline |
| Legg Mason Bw |
| Clearbridge Value Trust |
Legg Mason and Clearbridge Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Clearbridge Value
The main advantage of trading using opposite Legg Mason and Clearbridge Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Clearbridge Value 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 Value will offset losses from the drop in Clearbridge Value's long position.| Legg Mason vs. Virtus Real Estate | Legg Mason vs. Fidelity Real Estate | Legg Mason vs. Columbia Real Estate | Legg Mason vs. Commonwealth Real Estate |
| Clearbridge Value vs. Clearbridge Aggressive Growth | Clearbridge Value vs. Clearbridge Small Cap | Clearbridge Value vs. Qs International Equity | Clearbridge Value 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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