Correlation Between Legg Mason and Jpmorgan Emerging
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Jpmorgan 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 Jpmorgan 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 Jpmorgan Emerging Markets, you can compare the effects of market volatilities on Legg Mason and Jpmorgan 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 Jpmorgan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Jpmorgan Emerging.
Diversification Opportunities for Legg Mason and Jpmorgan Emerging
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Jpmorgan is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Jpmorgan Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Emerging Markets 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 Jpmorgan Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Emerging Markets has no effect on the direction of Legg Mason i.e., Legg Mason and Jpmorgan Emerging go up and down completely randomly.
Pair Corralation between Legg Mason and Jpmorgan Emerging
Assuming the 90 days trading horizon Legg Mason Partners is expected to under-perform the Jpmorgan Emerging. In addition to that, Legg Mason is 2.96 times more volatile than Jpmorgan Emerging Markets. It trades about -0.23 of its total potential returns per unit of risk. Jpmorgan Emerging Markets is currently generating about -0.04 per unit of volatility. If you would invest 3,055 in Jpmorgan Emerging Markets on September 12, 2024 and sell it today you would lose (19.00) from holding Jpmorgan Emerging Markets or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Jpmorgan Emerging Markets
Performance |
| Timeline |
| Legg Mason Partners |
| Jpmorgan Emerging Markets |
Legg Mason and Jpmorgan Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Jpmorgan Emerging
The main advantage of trading using opposite Legg Mason and Jpmorgan Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Jpmorgan 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 Jpmorgan Emerging will offset losses from the drop in Jpmorgan Emerging'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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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