Correlation Between Legg Mason and Federated Emerging
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Federated Emerging 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 Federated Emerging 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 Federated Emerging Market, you can compare the effects of market volatilities on Legg Mason and Federated Emerging 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 Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Federated Emerging.
Diversification Opportunities for Legg Mason and Federated Emerging
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Legg and Federated is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Federated Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Emerging Market 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 Federated Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Emerging Market has no effect on the direction of Legg Mason i.e., Legg Mason and Federated Emerging go up and down completely randomly.
Pair Corralation between Legg Mason and Federated Emerging
Assuming the 90 days trading horizon Legg Mason Partners is expected to under-perform the Federated Emerging. In addition to that, Legg Mason is 1.85 times more volatile than Federated Emerging Market. It trades about -0.02 of its total potential returns per unit of risk. Federated Emerging Market is currently generating about 0.23 per unit of volatility. If you would invest 785.00 in Federated Emerging Market on November 27, 2024 and sell it today you would earn a total of 9.00 from holding Federated Emerging Market or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Legg Mason Partners vs. Federated Emerging Market
Performance |
| Timeline |
| Legg Mason Partners |
| Federated Emerging Market |
Legg Mason and Federated Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Federated Emerging
The main advantage of trading using opposite Legg Mason and Federated Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Federated Emerging 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 Federated Emerging will offset losses from the drop in Federated Emerging's long position.| Legg Mason vs. Allianzgi Small Cap Blend | Legg Mason vs. T Rowe Price | Legg Mason vs. Ultrasmall Cap Profund Ultrasmall Cap | Legg Mason vs. Inverse Mid Cap Strategy |
| Federated Emerging vs. Glg Intl Small | Federated Emerging vs. Guidemark E Fixed | Federated Emerging vs. Shelton Emerging Markets | Federated Emerging vs. Arrow Managed Futures |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |