Correlation Between Leggmason Partners and Ab Value
Can any of the company-specific risk be diversified away by investing in both Leggmason Partners and Ab Value 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 Leggmason Partners and Ab Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leggmason Partners Institutional and Ab Value Fund, you can compare the effects of market volatilities on Leggmason Partners and Ab Value 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 Leggmason Partners with a short position of Ab Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and Ab Value.
Diversification Opportunities for Leggmason Partners and Ab Value
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leggmason and ABVCX is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Leggmason Partners Institution and Ab Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Value Fund and Leggmason Partners 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 Leggmason Partners Institutional are associated (or correlated) with Ab Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Value Fund has no effect on the direction of Leggmason Partners i.e., Leggmason Partners and Ab Value go up and down completely randomly.
Pair Corralation between Leggmason Partners and Ab Value
Assuming the 90 days horizon Leggmason Partners is expected to generate 3.07 times less return on investment than Ab Value. But when comparing it to its historical volatility, Leggmason Partners Institutional is 1.22 times less risky than Ab Value. It trades about 0.02 of its potential returns per unit of risk. Ab Value Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,681 in Ab Value Fund on August 24, 2024 and sell it today you would earn a total of 325.00 from holding Ab Value Fund or generate 19.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Leggmason Partners Institution vs. Ab Value Fund
Performance |
| Timeline |
| Leggmason Partners |
| Ab Value Fund |
Leggmason Partners and Ab Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggmason Partners and Ab Value
The main advantage of trading using opposite Leggmason Partners and Ab Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggmason Partners position performs unexpectedly, Ab Value 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 Ab Value will offset losses from the drop in Ab Value's long position.| Leggmason Partners vs. T Rowe Price | Leggmason Partners vs. T Rowe Price | Leggmason Partners vs. T Rowe Price | Leggmason Partners vs. Nuveen Minnesota Municipal |
| Ab Value vs. Small Cap Equity | Ab Value vs. Gmo Equity Allocation | Ab Value vs. The Hartford Equity | Ab Value vs. Rbc Global Equity |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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