Correlation Between Legg Mason and Martin Currie
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Martin Currie 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 Martin Currie 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 Martin Currie Emerging, you can compare the effects of market volatilities on Legg Mason and Martin Currie 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 Martin Currie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Martin Currie.
Diversification Opportunities for Legg Mason and Martin Currie
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legg and Martin is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Martin Currie Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Currie Emerging 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 Martin Currie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Currie Emerging has no effect on the direction of Legg Mason i.e., Legg Mason and Martin Currie go up and down completely randomly.
Pair Corralation between Legg Mason and Martin Currie
Assuming the 90 days horizon Legg Mason Bw is expected to generate 0.12 times more return on investment than Martin Currie. However, Legg Mason Bw is 8.55 times less risky than Martin Currie. It trades about 0.53 of its potential returns per unit of risk. Martin Currie Emerging is currently generating about -0.06 per unit of risk. If you would invest 866.00 in Legg Mason Bw on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Legg Mason Bw or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Legg Mason Bw vs. Martin Currie Emerging
Performance |
| Timeline |
| Legg Mason Bw |
| Martin Currie Emerging |
Legg Mason and Martin Currie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Martin Currie
The main advantage of trading using opposite Legg Mason and Martin Currie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Martin Currie 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 Martin Currie will offset losses from the drop in Martin Currie's long position.| Legg Mason vs. Rationalpier 88 Convertible | Legg Mason vs. Gabelli Convertible And | Legg Mason vs. Absolute Convertible Arbitrage | Legg Mason vs. Lord Abbett Convertible |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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