Correlation Between Legg Mason and Brandes Small
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Brandes Small 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 Brandes Small 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 Brandes Small Cap, you can compare the effects of market volatilities on Legg Mason and Brandes Small 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 Brandes Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Brandes Small.
Diversification Opportunities for Legg Mason and Brandes Small
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and Brandes is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Brandes Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Small 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 Brandes Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Small Cap has no effect on the direction of Legg Mason i.e., Legg Mason and Brandes Small go up and down completely randomly.
Pair Corralation between Legg Mason and Brandes Small
Assuming the 90 days trading horizon Legg Mason Partners is expected to under-perform the Brandes Small. In addition to that, Legg Mason is 3.02 times more volatile than Brandes Small Cap. It trades about -0.23 of its total potential returns per unit of risk. Brandes Small Cap is currently generating about 0.05 per unit of volatility. If you would invest 1,756 in Brandes Small Cap on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Brandes Small Cap or generate 0.68% 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. Brandes Small Cap
Performance |
| Timeline |
| Legg Mason Partners |
| Brandes Small Cap |
Legg Mason and Brandes Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Brandes Small
The main advantage of trading using opposite Legg Mason and Brandes Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Brandes Small 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 Brandes Small will offset losses from the drop in Brandes Small's long position.| Legg Mason vs. Eip Growth And | Legg Mason vs. Ftfa Franklin Templeton Growth | Legg Mason vs. Chase Growth Fund | Legg Mason vs. Pace Smallmedium Growth |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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