Correlation Between Legg Mason and Retirement Living
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Retirement Living 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 Retirement Living 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 Retirement Living Through, you can compare the effects of market volatilities on Legg Mason and Retirement Living 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 Retirement Living. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Retirement Living.
Diversification Opportunities for Legg Mason and Retirement Living
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Legg and Retirement is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Retirement Living Through in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retirement Living Through 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 Retirement Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retirement Living Through has no effect on the direction of Legg Mason i.e., Legg Mason and Retirement Living go up and down completely randomly.
Pair Corralation between Legg Mason and Retirement Living
Assuming the 90 days trading horizon Legg Mason Partners is expected to under-perform the Retirement Living. But the fund apears to be less risky and, when comparing its historical volatility, Legg Mason Partners is 1.33 times less risky than Retirement Living. The fund trades about -0.07 of its potential returns per unit of risk. The Retirement Living Through is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,508 in Retirement Living Through on November 28, 2024 and sell it today you would earn a total of 2.00 from holding Retirement Living Through or generate 0.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Legg Mason Partners vs. Retirement Living Through
Performance |
| Timeline |
| Legg Mason Partners |
| Retirement Living Through |
Legg Mason and Retirement Living Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Retirement Living
The main advantage of trading using opposite Legg Mason and Retirement Living positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Retirement Living 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 Retirement Living will offset losses from the drop in Retirement Living's long position.| Legg Mason vs. T Rowe Price | Legg Mason vs. Dreyfusstandish Global Fixed | Legg Mason vs. Crossmark Steward Equity | Legg Mason vs. Dodge International Stock |
| Retirement Living vs. Blackrock Diversified Fixed | Retirement Living vs. American Century Diversified | Retirement Living vs. Fidelity Advisor Diversified | Retirement Living vs. Elfun Diversified Fund |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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