Correlation Between Mainstay Balanced and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Mainstay Balanced and Legg Mason 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 Mainstay Balanced and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Balanced Fund and Legg Mason Partners, you can compare the effects of market volatilities on Mainstay Balanced and Legg Mason 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 Mainstay Balanced with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Balanced and Legg Mason.
Diversification Opportunities for Mainstay Balanced and Legg Mason
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mainstay and Legg is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Balanced Fund and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Mainstay Balanced 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 Mainstay Balanced Fund are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Partners has no effect on the direction of Mainstay Balanced i.e., Mainstay Balanced and Legg Mason go up and down completely randomly.
Pair Corralation between Mainstay Balanced and Legg Mason
Assuming the 90 days horizon Mainstay Balanced is expected to generate 1.32 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Mainstay Balanced Fund is 1.47 times less risky than Legg Mason. It trades about 0.24 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,376 in Legg Mason Partners on August 30, 2024 and sell it today you would earn a total of 84.00 from holding Legg Mason Partners or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Balanced Fund vs. Legg Mason Partners
Performance |
| Timeline |
| Mainstay Balanced |
| Legg Mason Partners |
Mainstay Balanced and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Balanced and Legg Mason
The main advantage of trading using opposite Mainstay Balanced and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Balanced position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Mainstay Balanced vs. Legg Mason Partners | Mainstay Balanced vs. Vanguard Emerging Markets | Mainstay Balanced vs. Dodge Cox Emerging | Mainstay Balanced vs. T Rowe Price |
| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |