Correlation Between Legg Mason and Blackrock Strategic
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Blackrock Strategic 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 Blackrock Strategic 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 Blackrock Strategic Income, you can compare the effects of market volatilities on Legg Mason and Blackrock Strategic 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 Blackrock Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Blackrock Strategic.
Diversification Opportunities for Legg Mason and Blackrock Strategic
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Legg and Blackrock is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Blackrock Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Strategic 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 Blackrock Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Strategic has no effect on the direction of Legg Mason i.e., Legg Mason and Blackrock Strategic go up and down completely randomly.
Pair Corralation between Legg Mason and Blackrock Strategic
Assuming the 90 days horizon Legg Mason is expected to generate 2.64 times less return on investment than Blackrock Strategic. In addition to that, Legg Mason is 1.14 times more volatile than Blackrock Strategic Income. It trades about 0.03 of its total potential returns per unit of risk. Blackrock Strategic Income is currently generating about 0.1 per unit of volatility. If you would invest 853.00 in Blackrock Strategic Income on August 24, 2024 and sell it today you would earn a total of 98.00 from holding Blackrock Strategic Income or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Blackrock Strategic Income
Performance |
| Timeline |
| Legg Mason Bw |
| Blackrock Strategic |
Legg Mason and Blackrock Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Blackrock Strategic
The main advantage of trading using opposite Legg Mason and Blackrock Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Blackrock Strategic 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 Blackrock Strategic will offset losses from the drop in Blackrock Strategic's long position.| Legg Mason vs. Blackrock Strategic Income | Legg Mason vs. Blackrock Strategic Opps | Legg Mason vs. Blackrock Strategic Opps | Legg Mason vs. Jpmorgan Strategic Income |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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