Correlation Between Leggmason Partners and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Leggmason Partners and Metropolitan West 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 Metropolitan West 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 Metropolitan West Opportunistic, you can compare the effects of market volatilities on Leggmason Partners and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and Metropolitan West.
Diversification Opportunities for Leggmason Partners and Metropolitan West
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Leggmason and Metropolitan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Leggmason Partners Institution and Metropolitan West Opportunisti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West has no effect on the direction of Leggmason Partners i.e., Leggmason Partners and Metropolitan West go up and down completely randomly.
Pair Corralation between Leggmason Partners and Metropolitan West
Assuming the 90 days horizon Leggmason Partners is expected to generate 1.34 times less return on investment than Metropolitan West. In addition to that, Leggmason Partners is 2.25 times more volatile than Metropolitan West Opportunistic. It trades about 0.02 of its total potential returns per unit of risk. Metropolitan West Opportunistic is currently generating about 0.05 per unit of volatility. If you would invest 680.00 in Metropolitan West Opportunistic on September 3, 2024 and sell it today you would earn a total of 60.00 from holding Metropolitan West Opportunistic or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Leggmason Partners Institution vs. Metropolitan West Opportunisti
Performance |
| Timeline |
| Leggmason Partners |
| Metropolitan West |
Leggmason Partners and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggmason Partners and Metropolitan West
The main advantage of trading using opposite Leggmason Partners and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggmason Partners position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West'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 |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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