Correlation Between Small Pany and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Small Pany 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 Small Pany and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Legg Mason Partners, you can compare the effects of market volatilities on Small Pany 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 Small Pany with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Pany and Legg Mason.
Diversification Opportunities for Small Pany and Legg Mason
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Legg is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth 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 Small Pany 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 Small Pany Growth 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 Small Pany i.e., Small Pany and Legg Mason go up and down completely randomly.
Pair Corralation between Small Pany and Legg Mason
Assuming the 90 days horizon Small Pany Growth is expected to generate 1.29 times more return on investment than Legg Mason. However, Small Pany is 1.29 times more volatile than Legg Mason Partners. It trades about 0.63 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.33 per unit of risk. If you would invest 1,286 in Small Pany Growth on September 2, 2024 and sell it today you would earn a total of 383.00 from holding Small Pany Growth or generate 29.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Legg Mason Partners
Performance |
| Timeline |
| Small Pany Growth |
| Legg Mason Partners |
Small Pany and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Pany and Legg Mason
The main advantage of trading using opposite Small Pany and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Pany 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.| Small Pany vs. Mid Cap Growth | Small Pany vs. Growth Portfolio Class | Small Pany vs. Morgan Stanley Multi | Small Pany vs. Emerging Markets Portfolio |
| Legg Mason vs. Shelton Emerging Markets | Legg Mason vs. Locorr Market Trend | Legg Mason vs. Rbc Emerging Markets | Legg Mason vs. Western Asset Diversified |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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