Correlation Between Blackrock and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Blackrock 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 Blackrock and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Sm Cap and Legg Mason Bw, you can compare the effects of market volatilities on Blackrock 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 Blackrock with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Legg Mason.
Diversification Opportunities for Blackrock and Legg Mason
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Blackrock and Legg is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Sm Cap 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 Blackrock 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 Blackrock Sm Cap 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 Blackrock i.e., Blackrock and Legg Mason go up and down completely randomly.
Pair Corralation between Blackrock and Legg Mason
Assuming the 90 days horizon Blackrock Sm Cap is expected to under-perform the Legg Mason. In addition to that, Blackrock is 1.58 times more volatile than Legg Mason Bw. It trades about -0.06 of its total potential returns per unit of risk. Legg Mason Bw is currently generating about 0.22 per unit of volatility. If you would invest 1,996 in Legg Mason Bw on November 30, 2024 and sell it today you would earn a total of 121.00 from holding Legg Mason Bw or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Sm Cap vs. Legg Mason Bw
Performance |
| Timeline |
| Blackrock Sm Cap |
| Legg Mason Bw |
Blackrock and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock and Legg Mason
The main advantage of trading using opposite Blackrock and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock 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.| Blackrock vs. Blackrock Intern Index | Blackrock vs. Blackrock Sp 500 | Blackrock vs. Blackrock Bond Index | Blackrock vs. Blackrock Small Cap |
| Legg Mason vs. Mesirow Financial High | Legg Mason vs. Prudential High Yield | Legg Mason vs. Artisan High Income | Legg Mason vs. Aqr Alternative Risk |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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