Correlation Between Legg Mason and Touchstone Sands
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Touchstone Sands 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 Touchstone Sands 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 Touchstone Sands Capital, you can compare the effects of market volatilities on Legg Mason and Touchstone Sands 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 Touchstone Sands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Touchstone Sands.
Diversification Opportunities for Legg Mason and Touchstone Sands
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Touchstone is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Touchstone Sands Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Sands Capital 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 Touchstone Sands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Sands Capital has no effect on the direction of Legg Mason i.e., Legg Mason and Touchstone Sands go up and down completely randomly.
Pair Corralation between Legg Mason and Touchstone Sands
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 1.36 times more return on investment than Touchstone Sands. However, Legg Mason is 1.36 times more volatile than Touchstone Sands Capital. It trades about 0.36 of its potential returns per unit of risk. Touchstone Sands Capital is currently generating about 0.42 per unit of risk. If you would invest 2,570 in Legg Mason Partners on September 1, 2024 and sell it today you would earn a total of 313.00 from holding Legg Mason Partners or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Legg Mason Partners vs. Touchstone Sands Capital
Performance |
| Timeline |
| Legg Mason Partners |
| Touchstone Sands Capital |
Legg Mason and Touchstone Sands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Touchstone Sands
The main advantage of trading using opposite Legg Mason and Touchstone Sands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Touchstone Sands 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 Touchstone Sands will offset losses from the drop in Touchstone Sands' long position.| Legg Mason vs. Transamerica Emerging Markets | Legg Mason vs. Angel Oak Multi Strategy | Legg Mason vs. Shelton Emerging Markets | Legg Mason vs. Eagle Mlp Strategy |
| Touchstone Sands vs. Tax Managed Mid Small | Touchstone Sands vs. The Hartford Small | Touchstone Sands vs. Ab Small Cap | Touchstone Sands vs. Legg Mason Partners |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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