Correlation Between Pacific Funds and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Pacific Funds 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 Pacific Funds and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Funds Small Cap and Legg Mason Partners, you can compare the effects of market volatilities on Pacific Funds 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 Pacific Funds with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Funds and Legg Mason.
Diversification Opportunities for Pacific Funds and Legg Mason
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pacific and Legg is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Funds Small Cap 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 Pacific Funds 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 Pacific Funds Small Cap 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 Pacific Funds i.e., Pacific Funds and Legg Mason go up and down completely randomly.
Pair Corralation between Pacific Funds and Legg Mason
Assuming the 90 days horizon Pacific Funds Small Cap is expected to under-perform the Legg Mason. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pacific Funds Small Cap is 1.08 times less risky than Legg Mason. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Legg Mason Partners is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,833 in Legg Mason Partners on September 3, 2024 and sell it today you would earn a total of 634.00 from holding Legg Mason Partners or generate 34.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 18.74% |
| Values | Daily Returns |
Pacific Funds Small Cap vs. Legg Mason Partners
Performance |
| Timeline |
| Pacific Funds Small |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Legg Mason Partners |
Pacific Funds and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Funds and Legg Mason
The main advantage of trading using opposite Pacific Funds and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Funds 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.| Pacific Funds vs. Virtus High Yield | Pacific Funds vs. Prudential High Yield | Pacific Funds vs. Gmo High Yield | Pacific Funds vs. Calvert High Yield |
| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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