Correlation Between Legg Mason and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Touchstone Large 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 Touchstone Large 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 Touchstone Large Cap, you can compare the effects of market volatilities on Legg Mason and Touchstone Large 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 Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Touchstone Large.
Diversification Opportunities for Legg Mason and Touchstone Large
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Touchstone is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap 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 Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Legg Mason i.e., Legg Mason and Touchstone Large go up and down completely randomly.
Pair Corralation between Legg Mason and Touchstone Large
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 0.46 times more return on investment than Touchstone Large. However, Legg Mason Partners is 2.19 times less risky than Touchstone Large. It trades about 0.17 of its potential returns per unit of risk. Touchstone Large Cap is currently generating about -0.2 per unit of risk. If you would invest 1,296 in Legg Mason Partners on September 13, 2024 and sell it today you would earn a total of 16.00 from holding Legg Mason Partners or generate 1.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Legg Mason Partners vs. Touchstone Large Cap
Performance |
Timeline |
Legg Mason Partners |
Touchstone Large Cap |
Legg Mason and Touchstone Large Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Legg Mason and Touchstone Large
The main advantage of trading using opposite Legg Mason and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Touchstone Large 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 Touchstone Large will offset losses from the drop in Touchstone Large'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 |
Touchstone Large vs. Virtus Convertible | Touchstone Large vs. Gabelli Convertible And | Touchstone Large vs. Calamos Dynamic Convertible | Touchstone Large vs. Putnam Convertible Incm Gwth |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation |