Correlation Between Legg Mason and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Metropolitan West 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 Metropolitan West 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 Metropolitan West Opportunistic, you can compare the effects of market volatilities on Legg Mason and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Metropolitan West.
Diversification Opportunities for Legg Mason and Metropolitan West
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legg and Metropolitan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Metropolitan West Opportunisti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West has no effect on the direction of Legg Mason i.e., Legg Mason and Metropolitan West go up and down completely randomly.
Pair Corralation between Legg Mason and Metropolitan West
If you would invest 1,270 in Legg Mason Partners on September 4, 2024 and sell it today you would earn a total of 41.00 from holding Legg Mason Partners or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Metropolitan West Opportunisti
Performance |
| Timeline |
| Legg Mason Partners |
| Metropolitan West |
Legg Mason and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Metropolitan West
The main advantage of trading using opposite Legg Mason and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West'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 |
| Metropolitan West vs. Ambrus Core Bond | Metropolitan West vs. T Rowe Price | Metropolitan West vs. Artisan High Income | Metropolitan West vs. Multisector Bond Sma |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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