Correlation Between Legg Mason and Pia High
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Pia High 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 Pia High 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 Pia High Yield, you can compare the effects of market volatilities on Legg Mason and Pia High 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 Pia High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Pia High.
Diversification Opportunities for Legg Mason and Pia High
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Pia is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Pia High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pia High Yield 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 Pia High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pia High Yield has no effect on the direction of Legg Mason i.e., Legg Mason and Pia High go up and down completely randomly.
Pair Corralation between Legg Mason and Pia High
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 4.21 times more return on investment than Pia High. However, Legg Mason is 4.21 times more volatile than Pia High Yield. It trades about 0.1 of its potential returns per unit of risk. Pia High Yield is currently generating about 0.25 per unit of risk. If you would invest 1,438 in Legg Mason Partners on September 3, 2024 and sell it today you would earn a total of 184.00 from holding Legg Mason Partners or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Pia High Yield
Performance |
| Timeline |
| Legg Mason Partners |
| Pia High Yield |
Legg Mason and Pia High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Pia High
The main advantage of trading using opposite Legg Mason and Pia High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Pia High 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 Pia High will offset losses from the drop in Pia High's long position.| Legg Mason vs. Avantis Large Cap | Legg Mason vs. Qs Large Cap | Legg Mason vs. Americafirst Large Cap | Legg Mason vs. Dana Large Cap |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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