Correlation Between Leggmason Partners and Large Cap
Can any of the company-specific risk be diversified away by investing in both Leggmason Partners and Large Cap 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 Large Cap 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 Large Cap Value, you can compare the effects of market volatilities on Leggmason Partners and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and Large Cap.
Diversification Opportunities for Leggmason Partners and Large Cap
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Leggmason and Large is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Leggmason Partners Institution and Large Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Value 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Value has no effect on the direction of Leggmason Partners i.e., Leggmason Partners and Large Cap go up and down completely randomly.
Pair Corralation between Leggmason Partners and Large Cap
Assuming the 90 days horizon Leggmason Partners is expected to generate 7.35 times less return on investment than Large Cap. But when comparing it to its historical volatility, Leggmason Partners Institutional is 8.69 times less risky than Large Cap. It trades about 0.1 of its potential returns per unit of risk. Large Cap Value is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,528 in Large Cap Value on September 4, 2024 and sell it today you would earn a total of 604.00 from holding Large Cap Value or generate 23.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
Leggmason Partners Institution vs. Large Cap Value
Performance |
| Timeline |
| Leggmason Partners |
| Large Cap Value |
Leggmason Partners and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggmason Partners and Large Cap
The main advantage of trading using opposite Leggmason Partners and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggmason Partners position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Leggmason Partners vs. Smallcap Growth Fund | Leggmason Partners vs. Eip Growth And | Leggmason Partners vs. Chase Growth Fund | Leggmason Partners vs. Pace Large Growth |
| Large Cap vs. Salient Alternative Beta | Large Cap vs. Aggressive Balanced Allocation | Large Cap vs. Salient Alternative Beta | Large Cap vs. Moderately Aggressive Balanced |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |