Correlation Between Leggmason Partners and Western Asset
Can any of the company-specific risk be diversified away by investing in both Leggmason Partners and Western Asset 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 Western Asset 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 Western Asset Municipal, you can compare the effects of market volatilities on Leggmason Partners and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and Western Asset.
Diversification Opportunities for Leggmason Partners and Western Asset
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leggmason and Western is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Leggmason Partners Institution and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Municipal has no effect on the direction of Leggmason Partners i.e., Leggmason Partners and Western Asset go up and down completely randomly.
Pair Corralation between Leggmason Partners and Western Asset
Assuming the 90 days horizon Leggmason Partners Institutional is expected to generate 0.42 times more return on investment than Western Asset. However, Leggmason Partners Institutional is 2.41 times less risky than Western Asset. It trades about 0.1 of its potential returns per unit of risk. Western Asset Municipal is currently generating about -0.03 per unit of risk. If you would invest 98.00 in Leggmason Partners Institutional on August 27, 2024 and sell it today you would earn a total of 2.00 from holding Leggmason Partners Institutional or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leggmason Partners Institution vs. Western Asset Municipal
Performance |
| Timeline |
| Leggmason Partners |
| Western Asset Municipal |
Leggmason Partners and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggmason Partners and Western Asset
The main advantage of trading using opposite Leggmason Partners and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggmason Partners position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Leggmason Partners vs. Rbc Microcap Value | Leggmason Partners vs. Acm Dynamic Opportunity | Leggmason Partners vs. Western Asset Municipal | Leggmason Partners vs. Scharf Global Opportunity |
| Western Asset vs. Prudential Jennison Financial | Western Asset vs. Financials Ultrasector Profund | Western Asset vs. Angel Oak Financial | Western Asset vs. Fidelity Advisor Financial |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |