Correlation Between Oracle and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Oracle 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 Oracle and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Legg Mason Partners, you can compare the effects of market volatilities on Oracle 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 Oracle with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Legg Mason.
Diversification Opportunities for Oracle and Legg Mason
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oracle and Legg is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Oracle 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 Oracle 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 Oracle 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 Oracle i.e., Oracle and Legg Mason go up and down completely randomly.
Pair Corralation between Oracle and Legg Mason
Given the investment horizon of 90 days Oracle is expected to generate 1.02 times less return on investment than Legg Mason. In addition to that, Oracle is 4.79 times more volatile than Legg Mason Partners. It trades about 0.03 of its total potential returns per unit of risk. Legg Mason Partners is currently generating about 0.14 per unit of volatility. If you would invest 1,303 in Legg Mason Partners on September 12, 2024 and sell it today you would earn a total of 13.00 from holding Legg Mason Partners or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oracle vs. Legg Mason Partners
Performance |
| Timeline |
| Oracle |
| Legg Mason Partners |
Oracle and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Legg Mason
The main advantage of trading using opposite Oracle and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle 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.| Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
| Legg Mason vs. Transamerica Intermediate Muni | Legg Mason vs. T Rowe Price | Legg Mason vs. T Rowe Price | Legg Mason vs. Bbh Intermediate Municipal |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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