Correlation Between Legg Mason and Clearbridge International
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Clearbridge International 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 International 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 International Value, you can compare the effects of market volatilities on Legg Mason and Clearbridge International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Clearbridge International.
Diversification Opportunities for Legg Mason and Clearbridge International
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Clearbridge is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Clearbridge International Valu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge International has no effect on the direction of Legg Mason i.e., Legg Mason and Clearbridge International go up and down completely randomly.
Pair Corralation between Legg Mason and Clearbridge International
Assuming the 90 days horizon Legg Mason is expected to generate 93.75 times less return on investment than Clearbridge International. But when comparing it to its historical volatility, Legg Mason Bw is 1.32 times less risky than Clearbridge International. It trades about 0.0 of its potential returns per unit of risk. Clearbridge International Value is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 712.00 in Clearbridge International Value on September 2, 2024 and sell it today you would earn a total of 130.00 from holding Clearbridge International Value or generate 18.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Clearbridge International Valu
Performance |
| Timeline |
| Legg Mason Bw |
| Clearbridge International |
Legg Mason and Clearbridge International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Clearbridge International
The main advantage of trading using opposite Legg Mason and Clearbridge International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Clearbridge International 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 International will offset losses from the drop in Clearbridge International'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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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