Correlation Between Legg Mason and Mainstay Epoch
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Mainstay Epoch 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 Mainstay Epoch 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 Mainstay Epoch Global, you can compare the effects of market volatilities on Legg Mason and Mainstay Epoch 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 Mainstay Epoch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Mainstay Epoch.
Diversification Opportunities for Legg Mason and Mainstay Epoch
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and Mainstay is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Mainstay Epoch Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Global 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 Mainstay Epoch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Epoch Global has no effect on the direction of Legg Mason i.e., Legg Mason and Mainstay Epoch go up and down completely randomly.
Pair Corralation between Legg Mason and Mainstay Epoch
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 1.36 times more return on investment than Mainstay Epoch. However, Legg Mason is 1.36 times more volatile than Mainstay Epoch Global. It trades about 0.37 of its potential returns per unit of risk. Mainstay Epoch Global is currently generating about 0.22 per unit of risk. If you would invest 2,339 in Legg Mason Partners on September 2, 2024 and sell it today you would earn a total of 128.00 from holding Legg Mason Partners or generate 5.47% 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. Mainstay Epoch Global
Performance |
| Timeline |
| Legg Mason Partners |
| Mainstay Epoch Global |
Legg Mason and Mainstay Epoch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Mainstay Epoch
The main advantage of trading using opposite Legg Mason and Mainstay Epoch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Mainstay Epoch 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 Mainstay Epoch will offset losses from the drop in Mainstay Epoch's long position.| Legg Mason vs. Siit Ultra Short | Legg Mason vs. Franklin Federal Limited Term | Legg Mason vs. The Short Term | Legg Mason vs. Maryland Short Term Tax Free |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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