Correlation Between Legg Mason and Enhanced Large
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Enhanced Large 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 Enhanced Large 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 Enhanced Large Pany, you can compare the effects of market volatilities on Legg Mason and Enhanced Large 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 Enhanced Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Enhanced Large.
Diversification Opportunities for Legg Mason and Enhanced Large
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Enhanced is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Enhanced Large Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enhanced Large Pany 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 Enhanced Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enhanced Large Pany has no effect on the direction of Legg Mason i.e., Legg Mason and Enhanced Large go up and down completely randomly.
Pair Corralation between Legg Mason and Enhanced Large
Assuming the 90 days horizon Legg Mason is expected to generate 1.83 times less return on investment than Enhanced Large. But when comparing it to its historical volatility, Legg Mason Bw is 5.97 times less risky than Enhanced Large. It trades about 0.51 of its potential returns per unit of risk. Enhanced Large Pany is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,551 in Enhanced Large Pany on September 13, 2024 and sell it today you would earn a total of 26.00 from holding Enhanced Large Pany or generate 1.68% 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. Enhanced Large Pany
Performance |
| Timeline |
| Legg Mason Bw |
| Enhanced Large Pany |
Legg Mason and Enhanced Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Enhanced Large
The main advantage of trading using opposite Legg Mason and Enhanced Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Enhanced Large 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 Enhanced Large will offset losses from the drop in Enhanced Large'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 |
| Enhanced Large vs. Us Micro Cap | Enhanced Large vs. Dfa Short Term Government | Enhanced Large vs. Emerging Markets Small | Enhanced Large vs. Dfa One Year Fixed |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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