Correlation Between Mesirow Financial and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial 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 Mesirow Financial and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesirow Financial Small and Legg Mason Bw, you can compare the effects of market volatilities on Mesirow Financial 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 Mesirow Financial with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Legg Mason.
Diversification Opportunities for Mesirow Financial and Legg Mason
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mesirow and Legg is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small 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 Mesirow Financial 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 Mesirow Financial Small 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 Mesirow Financial i.e., Mesirow Financial and Legg Mason go up and down completely randomly.
Pair Corralation between Mesirow Financial and Legg Mason
Assuming the 90 days horizon Mesirow Financial Small is expected to generate 1.28 times more return on investment than Legg Mason. However, Mesirow Financial is 1.28 times more volatile than Legg Mason Bw. It trades about 0.05 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.04 per unit of risk. If you would invest 1,136 in Mesirow Financial Small on August 30, 2024 and sell it today you would earn a total of 306.00 from holding Mesirow Financial Small or generate 26.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial Small vs. Legg Mason Bw
Performance |
| Timeline |
| Mesirow Financial Small |
| Legg Mason Bw |
Mesirow Financial and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and Legg Mason
The main advantage of trading using opposite Mesirow Financial and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial 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.| Mesirow Financial vs. Bbh Limited Duration | Mesirow Financial vs. Fa 529 Aggressive | Mesirow Financial vs. Abr 7525 Volatility | Mesirow Financial vs. Balanced Fund Investor |
| Legg Mason vs. Qs Large Cap | Legg Mason vs. Tax Managed Large Cap | Legg Mason vs. Pace Large Value | Legg Mason vs. Fidelity Series 1000 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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