Correlation Between Legg Mason and Nuveen Short
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Nuveen Short 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 Nuveen Short 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 Nuveen Short Term, you can compare the effects of market volatilities on Legg Mason and Nuveen Short 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 Nuveen Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Nuveen Short.
Diversification Opportunities for Legg Mason and Nuveen Short
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legg and Nuveen is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Nuveen Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Short Term 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 Nuveen Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Short Term has no effect on the direction of Legg Mason i.e., Legg Mason and Nuveen Short go up and down completely randomly.
Pair Corralation between Legg Mason and Nuveen Short
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 2.38 times more return on investment than Nuveen Short. However, Legg Mason is 2.38 times more volatile than Nuveen Short Term. It trades about 0.33 of its potential returns per unit of risk. Nuveen Short Term is currently generating about -0.09 per unit of risk. If you would invest 1,546 in Legg Mason Partners on September 1, 2024 and sell it today you would earn a total of 67.00 from holding Legg Mason Partners or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Legg Mason Partners vs. Nuveen Short Term
Performance |
| Timeline |
| Legg Mason Partners |
| Nuveen Short Term |
Legg Mason and Nuveen Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Nuveen Short
The main advantage of trading using opposite Legg Mason and Nuveen Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Nuveen Short 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 Nuveen Short will offset losses from the drop in Nuveen Short'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 |
| Nuveen Short vs. Legg Mason Partners | Nuveen Short vs. Metropolitan West High | Nuveen Short vs. Western Asset High | Nuveen Short vs. Siit High Yield |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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