Correlation Between Legg Mason and Fuller Thaler
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Fuller Thaler 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 Fuller Thaler 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 Fuller Thaler Behavioral, you can compare the effects of market volatilities on Legg Mason and Fuller Thaler 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 Fuller Thaler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Fuller Thaler.
Diversification Opportunities for Legg Mason and Fuller Thaler
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Fuller is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Fuller Thaler Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuller Thaler Behavioral 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 Fuller Thaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuller Thaler Behavioral has no effect on the direction of Legg Mason i.e., Legg Mason and Fuller Thaler go up and down completely randomly.
Pair Corralation between Legg Mason and Fuller Thaler
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 0.8 times more return on investment than Fuller Thaler. However, Legg Mason Partners is 1.25 times less risky than Fuller Thaler. It trades about -0.02 of its potential returns per unit of risk. Fuller Thaler Behavioral is currently generating about -0.08 per unit of risk. If you would invest 2,103 in Legg Mason Partners on January 12, 2025 and sell it today you would lose (30.00) from holding Legg Mason Partners or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Legg Mason Partners vs. Fuller Thaler Behavioral
Performance |
| Timeline |
| Legg Mason Partners |
| Fuller Thaler Behavioral |
Legg Mason and Fuller Thaler Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Fuller Thaler
The main advantage of trading using opposite Legg Mason and Fuller Thaler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Fuller Thaler 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 Fuller Thaler will offset losses from the drop in Fuller Thaler's long position.| Legg Mason vs. Us Government Securities | Legg Mason vs. Us Government Securities | Legg Mason vs. Us Government Securities | Legg Mason vs. Fidelity Series Government |
| Fuller Thaler vs. Fuller Thaler Behavioral | Fuller Thaler vs. Fuller Thaler Behavioral | Fuller Thaler vs. Fuller Thaler Behavioral | Fuller Thaler vs. Fuller Thaler 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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