Correlation Between Legg Mason and Mainstay High
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Mainstay 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 Mainstay 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 Mainstay High Yield, you can compare the effects of market volatilities on Legg Mason and Mainstay 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 Mainstay High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Mainstay High.
Diversification Opportunities for Legg Mason and Mainstay High
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legg and Mainstay is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Mainstay High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay 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 Mainstay High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay High Yield has no effect on the direction of Legg Mason i.e., Legg Mason and Mainstay High go up and down completely randomly.
Pair Corralation between Legg Mason and Mainstay High
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 1.73 times more return on investment than Mainstay High. However, Legg Mason is 1.73 times more volatile than Mainstay High Yield. It trades about 0.14 of its potential returns per unit of risk. Mainstay High Yield is currently generating about 0.12 per unit of risk. If you would invest 1,214 in Legg Mason Partners on September 5, 2024 and sell it today you would earn a total of 99.00 from holding Legg Mason Partners or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Legg Mason Partners vs. Mainstay High Yield
Performance |
| Timeline |
| Legg Mason Partners |
| Mainstay High Yield |
Legg Mason and Mainstay High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Mainstay High
The main advantage of trading using opposite Legg Mason and Mainstay High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Mainstay 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 Mainstay High will offset losses from the drop in Mainstay High's long position.| Legg Mason vs. Transamerica Large Cap | Legg Mason vs. Qs Large Cap | Legg Mason vs. Tax Managed Large Cap | Legg Mason vs. Americafirst Large Cap |
| Mainstay High vs. Bbh Intermediate Municipal | Mainstay High vs. California High Yield Municipal | Mainstay High vs. T Rowe Price | Mainstay High vs. Intermediate Term Tax Free Bond |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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