Correlation Between Legg Mason and Victory Integrity
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Victory Integrity 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 Victory Integrity 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 Victory Integrity Discovery, you can compare the effects of market volatilities on Legg Mason and Victory Integrity 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 Victory Integrity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Victory Integrity.
Diversification Opportunities for Legg Mason and Victory Integrity
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Victory is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Victory Integrity Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Integrity 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 Victory Integrity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Integrity has no effect on the direction of Legg Mason i.e., Legg Mason and Victory Integrity go up and down completely randomly.
Pair Corralation between Legg Mason and Victory Integrity
Assuming the 90 days trading horizon Legg Mason is expected to generate 1.55 times less return on investment than Victory Integrity. But when comparing it to its historical volatility, Legg Mason Partners is 2.89 times less risky than Victory Integrity. It trades about 0.15 of its potential returns per unit of risk. Victory Integrity Discovery is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,745 in Victory Integrity Discovery on September 4, 2024 and sell it today you would earn a total of 1,037 from holding Victory Integrity Discovery or generate 27.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Legg Mason Partners vs. Victory Integrity Discovery
Performance |
| Timeline |
| Legg Mason Partners |
| Victory Integrity |
Legg Mason and Victory Integrity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Victory Integrity
The main advantage of trading using opposite Legg Mason and Victory Integrity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Victory Integrity 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 Victory Integrity will offset losses from the drop in Victory Integrity'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 |
| Victory Integrity vs. Income Fund Income | Victory Integrity vs. Usaa Nasdaq 100 | Victory Integrity vs. Victory Diversified Stock | Victory Integrity vs. Intermediate Term Bond Fund |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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