Correlation Between Prudential High and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Prudential High 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 Prudential High and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential High Yield and Legg Mason Global, you can compare the effects of market volatilities on Prudential High 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 Prudential High with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and Legg Mason.
Diversification Opportunities for Prudential High and Legg Mason
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Prudential and Legg is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield and Legg Mason Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Global and Prudential High 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 Prudential High Yield 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 Global has no effect on the direction of Prudential High i.e., Prudential High and Legg Mason go up and down completely randomly.
Pair Corralation between Prudential High and Legg Mason
Assuming the 90 days horizon Prudential High is expected to generate 5.06 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Prudential High Yield is 1.58 times less risky than Legg Mason. It trades about 0.08 of its potential returns per unit of risk. Legg Mason Global is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 949.00 in Legg Mason Global on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Legg Mason Global or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential High Yield vs. Legg Mason Global
Performance |
| Timeline |
| Prudential High Yield |
| Legg Mason Global |
Prudential High and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential High and Legg Mason
The main advantage of trading using opposite Prudential High and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential High 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.| Prudential High vs. Prudential Total Return | Prudential High vs. Metropolitan West Total | Prudential High vs. John Hancock Disciplined | Prudential High vs. Europacific Growth Fund |
| Legg Mason vs. Calamos Global Equity | Legg Mason vs. Gmo Global Equity | Legg Mason vs. Qs Global Equity | Legg Mason vs. Touchstone International Equity |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| CEOs Directory Screen CEOs from public companies around the world | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance |