Correlation Between Legg Mason and Pacific Funds
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Pacific Funds 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 Pacific Funds 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 Pacific Funds Esg, you can compare the effects of market volatilities on Legg Mason and Pacific Funds 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 Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Pacific Funds.
Diversification Opportunities for Legg Mason and Pacific Funds
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legg and Pacific is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Pacific Funds Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Esg 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Esg has no effect on the direction of Legg Mason i.e., Legg Mason and Pacific Funds go up and down completely randomly.
Pair Corralation between Legg Mason and Pacific Funds
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 1.88 times more return on investment than Pacific Funds. However, Legg Mason is 1.88 times more volatile than Pacific Funds Esg. It trades about 0.33 of its potential returns per unit of risk. Pacific Funds Esg is currently generating about 0.1 per unit of risk. If you would invest 2,348 in Legg Mason Partners on September 1, 2024 and sell it today you would earn a total of 119.00 from holding Legg Mason Partners or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Pacific Funds Esg
Performance |
| Timeline |
| Legg Mason Partners |
| Pacific Funds Esg |
Legg Mason and Pacific Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Pacific Funds
The main advantage of trading using opposite Legg Mason and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Pacific Funds 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 Pacific Funds will offset losses from the drop in Pacific Funds' long position.| Legg Mason vs. Siit Ultra Short | Legg Mason vs. Franklin Federal Limited Term | Legg Mason vs. The Short Term | Legg Mason vs. Maryland Short Term Tax Free |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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