Correlation Between Leggmason Partners and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Leggmason Partners and Federated Mdt 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 Federated Mdt 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 Federated Mdt Large, you can compare the effects of market volatilities on Leggmason Partners and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and Federated Mdt.
Diversification Opportunities for Leggmason Partners and Federated Mdt
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Leggmason and Federated is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Leggmason Partners Institution and Federated Mdt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Large 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Large has no effect on the direction of Leggmason Partners i.e., Leggmason Partners and Federated Mdt go up and down completely randomly.
Pair Corralation between Leggmason Partners and Federated Mdt
Assuming the 90 days horizon Leggmason Partners is expected to generate 9.4 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Leggmason Partners Institutional is 2.03 times less risky than Federated Mdt. It trades about 0.02 of its potential returns per unit of risk. Federated Mdt Large is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,048 in Federated Mdt Large on October 22, 2024 and sell it today you would earn a total of 1,375 from holding Federated Mdt Large or generate 67.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Leggmason Partners Institution vs. Federated Mdt Large
Performance |
| Timeline |
| Leggmason Partners |
| Federated Mdt Large |
Leggmason Partners and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggmason Partners and Federated Mdt
The main advantage of trading using opposite Leggmason Partners and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggmason Partners position performs unexpectedly, Federated Mdt 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 Federated Mdt will offset losses from the drop in Federated Mdt's long position.| Leggmason Partners vs. Columbia Real Estate | Leggmason Partners vs. Simt Real Estate | Leggmason Partners vs. Prudential Real Estate | Leggmason Partners vs. Short Real Estate |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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