Correlation Between Legg Mason and One Choice
Can any of the company-specific risk be diversified away by investing in both Legg Mason and One Choice 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 One Choice 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 One Choice 2045, you can compare the effects of market volatilities on Legg Mason and One Choice 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 One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and One Choice.
Diversification Opportunities for Legg Mason and One Choice
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and One is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and One Choice 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice 2045 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 One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice 2045 has no effect on the direction of Legg Mason i.e., Legg Mason and One Choice go up and down completely randomly.
Pair Corralation between Legg Mason and One Choice
Assuming the 90 days trading horizon Legg Mason is expected to generate 1.02 times less return on investment than One Choice. But when comparing it to its historical volatility, Legg Mason Partners is 1.11 times less risky than One Choice. It trades about 0.12 of its potential returns per unit of risk. One Choice 2045 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,050 in One Choice 2045 on September 3, 2024 and sell it today you would earn a total of 80.00 from holding One Choice 2045 or generate 7.62% 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. One Choice 2045
Performance |
| Timeline |
| Legg Mason Partners |
| One Choice 2045 |
Legg Mason and One Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and One Choice
The main advantage of trading using opposite Legg Mason and One Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, One Choice 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 One Choice will offset losses from the drop in One Choice's long position.| Legg Mason vs. Blackrock Government Bond | Legg Mason vs. Inverse Government Long | Legg Mason vs. Dws Government Money | Legg Mason vs. Us Government Securities |
| One Choice vs. Virtus Dfa 2040 | One Choice vs. T Rowe Price | One Choice vs. T Rowe Price | One Choice vs. Legg Mason Partners |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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