Correlation Between Legg Mason and Teton Westwood
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Teton Westwood 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 Teton Westwood 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 Teton Westwood Balanced, you can compare the effects of market volatilities on Legg Mason and Teton Westwood 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 Teton Westwood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Teton Westwood.
Diversification Opportunities for Legg Mason and Teton Westwood
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and Teton is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Teton Westwood Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Westwood Balanced 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 Teton Westwood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Westwood Balanced has no effect on the direction of Legg Mason i.e., Legg Mason and Teton Westwood go up and down completely randomly.
Pair Corralation between Legg Mason and Teton Westwood
Assuming the 90 days trading horizon Legg Mason Partners is expected to under-perform the Teton Westwood. In addition to that, Legg Mason is 1.7 times more volatile than Teton Westwood Balanced. It trades about -0.24 of its total potential returns per unit of risk. Teton Westwood Balanced is currently generating about -0.23 per unit of volatility. If you would invest 1,132 in Teton Westwood Balanced on September 12, 2024 and sell it today you would lose (72.00) from holding Teton Westwood Balanced or give up 6.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Teton Westwood Balanced
Performance |
| Timeline |
| Legg Mason Partners |
| Teton Westwood Balanced |
Legg Mason and Teton Westwood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Teton Westwood
The main advantage of trading using opposite Legg Mason and Teton Westwood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Teton Westwood 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 Teton Westwood will offset losses from the drop in Teton Westwood'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 |
| Teton Westwood vs. Lord Abbett Affiliated | Teton Westwood vs. Touchstone Large Cap | Teton Westwood vs. Dana Large Cap | Teton Westwood vs. Qs Large Cap |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |