Correlation Between Legg Mason and Victory High
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Victory 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 Victory 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 Victory High Income, you can compare the effects of market volatilities on Legg Mason and Victory 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 Victory High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Victory High.
Diversification Opportunities for Legg Mason and Victory High
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and Victory is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Victory High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory High Income 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory High Income has no effect on the direction of Legg Mason i.e., Legg Mason and Victory High go up and down completely randomly.
Pair Corralation between Legg Mason and Victory High
Assuming the 90 days trading horizon Legg Mason is expected to generate 1.33 times less return on investment than Victory High. In addition to that, Legg Mason is 1.68 times more volatile than Victory High Income. It trades about 0.17 of its total potential returns per unit of risk. Victory High Income is currently generating about 0.39 per unit of volatility. If you would invest 968.00 in Victory High Income on September 13, 2024 and sell it today you would earn a total of 16.00 from holding Victory High Income or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Victory High Income
Performance |
| Timeline |
| Legg Mason Partners |
| Victory High Income |
Legg Mason and Victory High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Victory High
The main advantage of trading using opposite Legg Mason and Victory High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Victory 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 Victory High will offset losses from the drop in Victory High's long position.| Legg Mason vs. Issachar Fund Class | Legg Mason vs. T Rowe Price | Legg Mason vs. Volumetric Fund Volumetric | Legg Mason vs. T Rowe Price |
| Victory High vs. Aqr Large Cap | Victory High vs. M Large Cap | Victory High vs. Touchstone Large Cap | Victory High vs. Qs Large Cap |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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