Correlation Between Legg Mason and Aqr Risk-balanced
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Aqr Risk-balanced 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 Legg Mason and Aqr Risk-balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Partners and Aqr Risk Balanced Modities, you can compare the effects of market volatilities on Legg Mason and Aqr Risk-balanced 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 Legg Mason with a short position of Aqr Risk-balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Aqr Risk-balanced.
Diversification Opportunities for Legg Mason and Aqr Risk-balanced
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and AQR is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Aqr Risk Balanced Modities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Risk Balanced and Legg Mason 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 Legg Mason Partners are associated (or correlated) with Aqr Risk-balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Risk Balanced has no effect on the direction of Legg Mason i.e., Legg Mason and Aqr Risk-balanced go up and down completely randomly.
Pair Corralation between Legg Mason and Aqr Risk-balanced
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 0.78 times more return on investment than Aqr Risk-balanced. However, Legg Mason Partners is 1.28 times less risky than Aqr Risk-balanced. It trades about 0.19 of its potential returns per unit of risk. Aqr Risk Balanced Modities is currently generating about -0.04 per unit of risk. If you would invest 1,568 in Legg Mason Partners on August 31, 2024 and sell it today you would earn a total of 45.00 from holding Legg Mason Partners or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Aqr Risk Balanced Modities
Performance |
| Timeline |
| Legg Mason Partners |
| Aqr Risk Balanced |
Legg Mason and Aqr Risk-balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Aqr Risk-balanced
The main advantage of trading using opposite Legg Mason and Aqr Risk-balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Aqr Risk-balanced 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 Aqr Risk-balanced will offset losses from the drop in Aqr Risk-balanced's long position.| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
| Aqr Risk-balanced vs. Commodityrealreturn Strategy Fund | Aqr Risk-balanced vs. Commodityrealreturn Strategy Fund | Aqr Risk-balanced vs. HUMANA INC | Aqr Risk-balanced vs. Aquagold International |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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