Correlation Between Old Westbury and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Old Westbury 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 Old Westbury and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Large and Legg Mason Bw, you can compare the effects of market volatilities on Old Westbury 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 Old Westbury with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Legg Mason.
Diversification Opportunities for Old Westbury and Legg Mason
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Legg is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large 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 Old Westbury 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 Old Westbury Large 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 Old Westbury i.e., Old Westbury and Legg Mason go up and down completely randomly.
Pair Corralation between Old Westbury and Legg Mason
Assuming the 90 days horizon Old Westbury is expected to generate 1.58 times less return on investment than Legg Mason. In addition to that, Old Westbury is 1.19 times more volatile than Legg Mason Bw. It trades about 0.24 of its total potential returns per unit of risk. Legg Mason Bw is currently generating about 0.46 per unit of volatility. If you would invest 1,963 in Legg Mason Bw on November 11, 2024 and sell it today you would earn a total of 122.00 from holding Legg Mason Bw or generate 6.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Large vs. Legg Mason Bw
Performance |
| Timeline |
| Old Westbury Large |
| Legg Mason Bw |
Old Westbury and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Legg Mason
The main advantage of trading using opposite Old Westbury and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury 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.| Old Westbury vs. Doubleline Total Return | Old Westbury vs. Barings High Yield | Old Westbury vs. Siit High Yield | Old Westbury vs. Ab Bond Inflation |
| Legg Mason vs. Issachar Fund Class | Legg Mason vs. Touchstone Funds Group | Legg Mason vs. Bbh Partner Fund | Legg Mason vs. T Rowe Price |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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