Correlation Between Pro-blend(r) Moderate and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Pro-blend(r) Moderate 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 Pro-blend(r) Moderate and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pro Blend Moderate Term and Legg Mason Partners, you can compare the effects of market volatilities on Pro-blend(r) Moderate 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 Pro-blend(r) Moderate with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro-blend(r) Moderate and Legg Mason.
Diversification Opportunities for Pro-blend(r) Moderate and Legg Mason
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pro-blend(r) and Legg is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pro Blend Moderate Term 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 Pro-blend(r) Moderate 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 Pro Blend Moderate Term 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 Pro-blend(r) Moderate i.e., Pro-blend(r) Moderate and Legg Mason go up and down completely randomly.
Pair Corralation between Pro-blend(r) Moderate and Legg Mason
Assuming the 90 days horizon Pro-blend(r) Moderate is expected to generate 26.99 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Pro Blend Moderate Term is 58.11 times less risky than Legg Mason. It trades about 0.09 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 93.00 in Legg Mason Partners on September 1, 2024 and sell it today you would earn a total of 7.00 from holding Legg Mason Partners or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Pro Blend Moderate Term vs. Legg Mason Partners
Performance |
| Timeline |
| Pro-blend(r) Moderate |
| Legg Mason Partners |
Pro-blend(r) Moderate and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pro-blend(r) Moderate and Legg Mason
The main advantage of trading using opposite Pro-blend(r) Moderate and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pro-blend(r) Moderate 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.| Pro-blend(r) Moderate vs. Western Asset Municipal | Pro-blend(r) Moderate vs. Fa 529 Aggressive | Pro-blend(r) Moderate vs. Volumetric Fund Volumetric | Pro-blend(r) Moderate vs. Abr 7525 Volatility |
| Legg Mason vs. Ep Emerging Markets | Legg Mason vs. Origin Emerging Markets | Legg Mason vs. Eagle Mlp Strategy | Legg Mason vs. Artisan Emerging Markets |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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