Correlation Between Leggmason Partners and Embark Small
Can any of the company-specific risk be diversified away by investing in both Leggmason Partners and Embark 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 Leggmason Partners and Embark Small 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 Embark Small Cap, you can compare the effects of market volatilities on Leggmason Partners and Embark 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 Leggmason Partners with a short position of Embark Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and Embark Small.
Diversification Opportunities for Leggmason Partners and Embark Small
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Leggmason and Embark is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Leggmason Partners Institution and Embark Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Small Cap 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 Embark Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Small Cap has no effect on the direction of Leggmason Partners i.e., Leggmason Partners and Embark Small go up and down completely randomly.
Pair Corralation between Leggmason Partners and Embark Small
Assuming the 90 days horizon Leggmason Partners is expected to generate 7.37 times less return on investment than Embark Small. But when comparing it to its historical volatility, Leggmason Partners Institutional is 1.52 times less risky than Embark Small. It trades about 0.02 of its potential returns per unit of risk. Embark Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 977.00 in Embark Small Cap on September 3, 2024 and sell it today you would earn a total of 202.00 from holding Embark Small Cap or generate 20.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 41.72% |
| Values | Daily Returns |
Leggmason Partners Institution vs. Embark Small Cap
Performance |
| Timeline |
| Leggmason Partners |
| Embark Small Cap |
Leggmason Partners and Embark Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggmason Partners and Embark Small
The main advantage of trading using opposite Leggmason Partners and Embark Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggmason Partners position performs unexpectedly, Embark 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 Embark Small will offset losses from the drop in Embark Small's long position.| Leggmason Partners vs. Multisector Bond Sma | Leggmason Partners vs. Ms Global Fixed | Leggmason Partners vs. Gmo High Yield | Leggmason Partners vs. Ab Bond Inflation |
| Embark Small vs. Leggmason Partners Institutional | Embark Small vs. Scharf Global Opportunity | Embark Small vs. Fa 529 Aggressive | Embark Small vs. Abr 7525 Volatility |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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