Correlation Between Legg Mason and Qs Small
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Qs Small 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 Qs Small 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 Qs Small Capitalization, you can compare the effects of market volatilities on Legg Mason and Qs Small 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 Qs Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Qs Small.
Diversification Opportunities for Legg Mason and Qs Small
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legg and LGSCX is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Qs Small Capitalization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Small Capitalization 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 Qs Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Small Capitalization has no effect on the direction of Legg Mason i.e., Legg Mason and Qs Small go up and down completely randomly.
Pair Corralation between Legg Mason and Qs Small
Assuming the 90 days horizon Legg Mason is expected to generate 13.24 times less return on investment than Qs Small. But when comparing it to its historical volatility, Legg Mason Bw is 14.51 times less risky than Qs Small. It trades about 0.23 of its potential returns per unit of risk. Qs Small Capitalization is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,297 in Qs Small Capitalization on August 27, 2024 and sell it today you would earn a total of 99.00 from holding Qs Small Capitalization or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Qs Small Capitalization
Performance |
| Timeline |
| Legg Mason Bw |
| Qs Small Capitalization |
Legg Mason and Qs Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Qs Small
The main advantage of trading using opposite Legg Mason and Qs Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Qs Small 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 Qs Small will offset losses from the drop in Qs Small'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 |
| Qs Small vs. Qs Growth Fund | Qs Small vs. Ab E Opportunities | Qs Small vs. Rational Special Situations | Qs Small vs. Lord Abbett Diversified |
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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