Correlation Between Legg Mason and Clearbridge Appreciation
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Clearbridge Appreciation 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 Appreciation 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 Appreciation Fund, you can compare the effects of market volatilities on Legg Mason and Clearbridge Appreciation 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 Appreciation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Clearbridge Appreciation.
Diversification Opportunities for Legg Mason and Clearbridge Appreciation
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legg and Clearbridge is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Clearbridge Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Appreciation 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 Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Appreciation has no effect on the direction of Legg Mason i.e., Legg Mason and Clearbridge Appreciation go up and down completely randomly.
Pair Corralation between Legg Mason and Clearbridge Appreciation
Assuming the 90 days horizon Legg Mason is expected to generate 15.67 times less return on investment than Clearbridge Appreciation. But when comparing it to its historical volatility, Legg Mason Bw is 1.43 times less risky than Clearbridge Appreciation. It trades about 0.01 of its potential returns per unit of risk. Clearbridge Appreciation Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,268 in Clearbridge Appreciation Fund on September 1, 2024 and sell it today you would earn a total of 409.00 from holding Clearbridge Appreciation Fund or generate 12.52% 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 Appreciation Fund
Performance |
| Timeline |
| Legg Mason Bw |
| Clearbridge Appreciation |
Legg Mason and Clearbridge Appreciation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Clearbridge Appreciation
The main advantage of trading using opposite Legg Mason and Clearbridge Appreciation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Clearbridge Appreciation 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 Appreciation will offset losses from the drop in Clearbridge Appreciation's long position.| Legg Mason vs. The Hartford Healthcare | Legg Mason vs. Blackrock Health Sciences | Legg Mason vs. Prudential Health Sciences | Legg Mason vs. Live Oak Health |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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