Correlation Between Clearbridge Large and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Clearbridge Large 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 Clearbridge Large and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge Large Cap and Legg Mason Bw, you can compare the effects of market volatilities on Clearbridge Large 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 Clearbridge Large with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Large and Legg Mason.
Diversification Opportunities for Clearbridge Large and Legg Mason
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Clearbridge and Legg is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Large Cap and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Clearbridge Large 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 Clearbridge Large Cap 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 Bw has no effect on the direction of Clearbridge Large i.e., Clearbridge Large and Legg Mason go up and down completely randomly.
Pair Corralation between Clearbridge Large and Legg Mason
Assuming the 90 days horizon Clearbridge Large Cap is expected to under-perform the Legg Mason. But the mutual fund apears to be less risky and, when comparing its historical volatility, Clearbridge Large Cap is 1.11 times less risky than Legg Mason. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Legg Mason Bw is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 2,331 in Legg Mason Bw on September 12, 2024 and sell it today you would lose (23.00) from holding Legg Mason Bw or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Large Cap vs. Legg Mason Bw
Performance |
| Timeline |
| Clearbridge Large Cap |
| Legg Mason Bw |
Clearbridge Large and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Large and Legg Mason
The main advantage of trading using opposite Clearbridge Large and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Large 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.| Clearbridge Large vs. Locorr Market Trend | Clearbridge Large vs. Shelton Emerging Markets | Clearbridge Large vs. Origin Emerging Markets | Clearbridge Large vs. Investec Emerging Markets |
| Legg Mason vs. Simt Multi Asset Inflation | Legg Mason vs. Loomis Sayles Inflation | Legg Mason vs. Guggenheim Managed Futures | Legg Mason vs. Ab Bond Inflation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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