Correlation Between Leggmason Partners and American Beacon
Can any of the company-specific risk be diversified away by investing in both Leggmason Partners and American Beacon 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 American Beacon 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 American Beacon Stephens, you can compare the effects of market volatilities on Leggmason Partners and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and American Beacon.
Diversification Opportunities for Leggmason Partners and American Beacon
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Leggmason and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Leggmason Partners Institution and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Stephens has no effect on the direction of Leggmason Partners i.e., Leggmason Partners and American Beacon go up and down completely randomly.
Pair Corralation between Leggmason Partners and American Beacon
Assuming the 90 days horizon Leggmason Partners is expected to generate 6.02 times less return on investment than American Beacon. But when comparing it to its historical volatility, Leggmason Partners Institutional is 1.43 times less risky than American Beacon. It trades about 0.02 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,160 in American Beacon Stephens on September 12, 2024 and sell it today you would earn a total of 505.00 from holding American Beacon Stephens or generate 43.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Leggmason Partners Institution vs. American Beacon Stephens
Performance |
| Timeline |
| Leggmason Partners |
| American Beacon Stephens |
Leggmason Partners and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggmason Partners and American Beacon
The main advantage of trading using opposite Leggmason Partners and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggmason Partners position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Leggmason Partners vs. Siit Ultra Short | Leggmason Partners vs. Blackrock Short Term Inflat Protected | Leggmason Partners vs. Dreyfus Short Intermediate | Leggmason Partners vs. Astor Longshort Fund |
| American Beacon vs. Needham Aggressive Growth | American Beacon vs. Ultramid Cap Profund Ultramid Cap | American Beacon vs. HUMANA INC | American Beacon vs. Barloworld Ltd ADR |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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