Correlation Between Legg Mason and Tiaa-cref Growth
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Tiaa-cref Growth 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 Tiaa-cref Growth 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 Tiaa Cref Growth Income, you can compare the effects of market volatilities on Legg Mason and Tiaa-cref Growth 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 Tiaa-cref Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Tiaa-cref Growth.
Diversification Opportunities for Legg Mason and Tiaa-cref Growth
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and TIAA-CREF is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Tiaa Cref Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Growth 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 Tiaa-cref Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Growth has no effect on the direction of Legg Mason i.e., Legg Mason and Tiaa-cref Growth go up and down completely randomly.
Pair Corralation between Legg Mason and Tiaa-cref Growth
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 0.74 times more return on investment than Tiaa-cref Growth. However, Legg Mason Partners is 1.36 times less risky than Tiaa-cref Growth. It trades about 0.18 of its potential returns per unit of risk. Tiaa Cref Growth Income is currently generating about 0.13 per unit of risk. If you would invest 2,149 in Legg Mason Partners on September 1, 2024 and sell it today you would earn a total of 318.00 from holding Legg Mason Partners or generate 14.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Tiaa Cref Growth Income
Performance |
| Timeline |
| Legg Mason Partners |
| Tiaa Cref Growth |
Legg Mason and Tiaa-cref Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Tiaa-cref Growth
The main advantage of trading using opposite Legg Mason and Tiaa-cref Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Tiaa-cref Growth 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 Tiaa-cref Growth will offset losses from the drop in Tiaa-cref Growth's 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 |
| Tiaa-cref Growth vs. Tiaa Cref International Equity | Tiaa-cref Growth vs. Tiaa Cref Mid Cap Value | Tiaa-cref Growth vs. Tiaa Cref Mid Cap Growth | Tiaa-cref Growth vs. Tiaa Cref Large Cap Value |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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