Correlation Between Aqr Large and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Aqr Large 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 Aqr Large and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Large Cap and Legg Mason Bw, you can compare the effects of market volatilities on Aqr Large 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 Aqr Large with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and Legg Mason.
Diversification Opportunities for Aqr Large and Legg Mason
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AQR and Legg is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap 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 Aqr Large 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 Aqr Large 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 Bw has no effect on the direction of Aqr Large i.e., Aqr Large and Legg Mason go up and down completely randomly.
Pair Corralation between Aqr Large and Legg Mason
Assuming the 90 days horizon Aqr Large is expected to generate 1.1 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Aqr Large Cap is 1.04 times less risky than Legg Mason. It trades about 0.21 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,216 in Legg Mason Bw on August 28, 2024 and sell it today you would earn a total of 105.00 from holding Legg Mason Bw or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Large Cap vs. Legg Mason Bw
Performance |
| Timeline |
| Aqr Large Cap |
| Legg Mason Bw |
Aqr Large and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Large and Legg Mason
The main advantage of trading using opposite Aqr Large and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Large 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.| Aqr Large vs. Aqr Large Cap | Aqr Large vs. Aqr Large Cap | Aqr Large vs. Aqr International Defensive | Aqr Large vs. Aqr International Defensive |
| Legg Mason vs. Clearbridge Aggressive Growth | Legg Mason vs. Clearbridge Small Cap | Legg Mason vs. Qs International Equity | Legg Mason vs. Clearbridge Appreciation Fund |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |