Correlation Between Leggmason Partners and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Leggmason Partners and Timothy Plan 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 Timothy Plan 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 Timothy Plan Growth, you can compare the effects of market volatilities on Leggmason Partners and Timothy Plan 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 Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and Timothy Plan.
Diversification Opportunities for Leggmason Partners and Timothy Plan
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Leggmason and Timothy is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Leggmason Partners Institution and Timothy Plan Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Growth 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 Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan Growth has no effect on the direction of Leggmason Partners i.e., Leggmason Partners and Timothy Plan go up and down completely randomly.
Pair Corralation between Leggmason Partners and Timothy Plan
Assuming the 90 days horizon Leggmason Partners is expected to generate 3.73 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, Leggmason Partners Institutional is 3.74 times less risky than Timothy Plan. It trades about 0.11 of its potential returns per unit of risk. Timothy Plan Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 995.00 in Timothy Plan Growth on August 31, 2024 and sell it today you would earn a total of 118.00 from holding Timothy Plan Growth or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leggmason Partners Institution vs. Timothy Plan Growth
Performance |
| Timeline |
| Leggmason Partners |
| Timothy Plan Growth |
Leggmason Partners and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggmason Partners and Timothy Plan
The main advantage of trading using opposite Leggmason Partners and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggmason Partners position performs unexpectedly, Timothy Plan 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 Timothy Plan will offset losses from the drop in Timothy Plan's long position.| Leggmason Partners vs. Franklin Lifesmart Retirement | Leggmason Partners vs. Saat Moderate Strategy | Leggmason Partners vs. Target Retirement 2040 | Leggmason Partners vs. Franklin Lifesmart Retirement |
| Timothy Plan vs. Leggmason Partners Institutional | Timothy Plan vs. Ab Value Fund | Timothy Plan vs. Western Asset Municipal | Timothy Plan vs. Iaadx |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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