Correlation Between Legg Mason and Virtus Convertible
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Virtus Convertible 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 Legg Mason and Virtus Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Partners and Virtus Convertible, you can compare the effects of market volatilities on Legg Mason and Virtus Convertible 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 Legg Mason with a short position of Virtus Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Virtus Convertible.
Diversification Opportunities for Legg Mason and Virtus Convertible
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legg and Virtus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible and Legg Mason 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 Legg Mason Partners are associated (or correlated) with Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Legg Mason i.e., Legg Mason and Virtus Convertible go up and down completely randomly.
Pair Corralation between Legg Mason and Virtus Convertible
Assuming the 90 days horizon Legg Mason is expected to generate 15.06 times less return on investment than Virtus Convertible. But when comparing it to its historical volatility, Legg Mason Partners is 7.38 times less risky than Virtus Convertible. It trades about 0.09 of its potential returns per unit of risk. Virtus Convertible is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,130 in Virtus Convertible on November 3, 2024 and sell it today you would earn a total of 501.00 from holding Virtus Convertible or generate 16.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Virtus Convertible
Performance |
| Timeline |
| Legg Mason Partners |
| Virtus Convertible |
Legg Mason and Virtus Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Virtus Convertible
The main advantage of trading using opposite Legg Mason and Virtus Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Virtus Convertible 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 Virtus Convertible will offset losses from the drop in Virtus Convertible's long position.| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
| Virtus Convertible vs. Short Precious Metals | Virtus Convertible vs. Deutsche Gold Precious | Virtus Convertible vs. International Investors Gold | Virtus Convertible vs. Global Gold Fund |
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.
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