Correlation Between Massmutual Premier and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Massmutual Premier 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 Massmutual Premier and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massmutual Premier Diversified and Legg Mason Bw, you can compare the effects of market volatilities on Massmutual Premier 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 Massmutual Premier with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Premier and Legg Mason.
Diversification Opportunities for Massmutual Premier and Legg Mason
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Massmutual and Legg is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Premier Diversified and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Massmutual Premier 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 Massmutual Premier Diversified 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 Bw has no effect on the direction of Massmutual Premier i.e., Massmutual Premier and Legg Mason go up and down completely randomly.
Pair Corralation between Massmutual Premier and Legg Mason
Assuming the 90 days horizon Massmutual Premier is expected to generate 6.31 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Massmutual Premier Diversified is 3.05 times less risky than Legg Mason. It trades about 0.17 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,216 in Legg Mason Bw on September 3, 2024 and sell it today you would earn a total of 158.00 from holding Legg Mason Bw or generate 7.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massmutual Premier Diversified vs. Legg Mason Bw
Performance |
| Timeline |
| Massmutual Premier |
| Legg Mason Bw |
Massmutual Premier and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Premier and Legg Mason
The main advantage of trading using opposite Massmutual Premier and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Premier 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.| Massmutual Premier vs. Dreyfusstandish Global Fixed | Massmutual Premier vs. Nationwide Global Equity | Massmutual Premier vs. Legg Mason Global | Massmutual Premier vs. Barings Global Floating |
| Legg Mason vs. Dodge Cox Stock | Legg Mason vs. American Funds American | Legg Mason vs. American Funds American | Legg Mason vs. American Mutual 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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