Correlation Between Lord Abbett and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Legg Mason 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 Lord Abbett and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Diversified and Legg Mason Partners, you can compare the effects of market volatilities on Lord Abbett and Legg Mason 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 Lord Abbett with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Legg Mason.
Diversification Opportunities for Lord Abbett and Legg Mason
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lord and Legg is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Lord Abbett 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 Lord Abbett Diversified are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Partners has no effect on the direction of Lord Abbett i.e., Lord Abbett and Legg Mason go up and down completely randomly.
Pair Corralation between Lord Abbett and Legg Mason
Assuming the 90 days horizon Lord Abbett is expected to generate 1.75 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Lord Abbett Diversified is 2.03 times less risky than Legg Mason. It trades about 0.14 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,325 in Legg Mason Partners on September 14, 2024 and sell it today you would earn a total of 296.00 from holding Legg Mason Partners or generate 22.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Diversified vs. Legg Mason Partners
Performance |
| Timeline |
| Lord Abbett Diversified |
| Legg Mason Partners |
Lord Abbett and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Legg Mason
The main advantage of trading using opposite Lord Abbett and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Lord Abbett vs. Qs Large Cap | Lord Abbett vs. Qs Large Cap | Lord Abbett vs. Pace Large Value | Lord Abbett vs. Dodge Cox Stock |
| Legg Mason vs. Gabelli Gold Fund | Legg Mason vs. Gamco Global Gold | Legg Mason vs. Global Gold Fund | Legg Mason vs. Fidelity Advisor Gold |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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