Correlation Between Legg Mason and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Sterling Capital 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 Sterling Capital 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 Sterling Capital Porate, you can compare the effects of market volatilities on Legg Mason and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Sterling Capital.
Diversification Opportunities for Legg Mason and Sterling Capital
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Sterling is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Sterling Capital Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Porate 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Porate has no effect on the direction of Legg Mason i.e., Legg Mason and Sterling Capital go up and down completely randomly.
Pair Corralation between Legg Mason and Sterling Capital
Assuming the 90 days trading horizon Legg Mason is expected to generate 1.12 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Legg Mason Partners is 1.69 times less risky than Sterling Capital. It trades about 0.17 of its potential returns per unit of risk. Sterling Capital Porate is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 697.00 in Sterling Capital Porate on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Sterling Capital Porate or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Legg Mason Partners vs. Sterling Capital Porate
Performance |
| Timeline |
| Legg Mason Partners |
| Sterling Capital Porate |
Legg Mason and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Sterling Capital
The main advantage of trading using opposite Legg Mason and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital'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 |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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