Correlation Between Legg Mason and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Neuberger Berman 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 Neuberger Berman 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 Neuberger Berman Floating, you can compare the effects of market volatilities on Legg Mason and Neuberger Berman 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 Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Neuberger Berman.
Diversification Opportunities for Legg Mason and Neuberger Berman
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Neuberger is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Neuberger Berman Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Floating 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 Neuberger Berman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuberger Berman Floating has no effect on the direction of Legg Mason i.e., Legg Mason and Neuberger Berman go up and down completely randomly.
Pair Corralation between Legg Mason and Neuberger Berman
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 6.55 times more return on investment than Neuberger Berman. However, Legg Mason is 6.55 times more volatile than Neuberger Berman Floating. It trades about 0.06 of its potential returns per unit of risk. Neuberger Berman Floating is currently generating about 0.23 per unit of risk. If you would invest 1,829 in Legg Mason Partners on September 4, 2024 and sell it today you would earn a total of 625.00 from holding Legg Mason Partners or generate 34.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Legg Mason Partners vs. Neuberger Berman Floating
Performance |
| Timeline |
| Legg Mason Partners |
| Neuberger Berman Floating |
Legg Mason and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Neuberger Berman
The main advantage of trading using opposite Legg Mason and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Neuberger Berman 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 Neuberger Berman will offset losses from the drop in Neuberger Berman's long position.| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
| Neuberger Berman vs. Neuberger Berman Large | Neuberger Berman vs. Neuberger Berman Large | Neuberger Berman vs. Neuberger Berman Large | Neuberger Berman vs. Neuberger Berman Large |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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