Correlation Between Legg Mason and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Ashmore Emerging 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 Ashmore Emerging 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 Ashmore Emerging Markets, you can compare the effects of market volatilities on Legg Mason and Ashmore Emerging 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 Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Ashmore Emerging.
Diversification Opportunities for Legg Mason and Ashmore Emerging
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Ashmore is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets 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 Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Legg Mason i.e., Legg Mason and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Legg Mason and Ashmore Emerging
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 3.66 times more return on investment than Ashmore Emerging. However, Legg Mason is 3.66 times more volatile than Ashmore Emerging Markets. It trades about 0.1 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.1 per unit of risk. If you would invest 2,467 in Legg Mason Partners on September 3, 2024 and sell it today you would earn a total of 416.00 from holding Legg Mason Partners or generate 16.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Legg Mason Partners |
| Ashmore Emerging Markets |
Legg Mason and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Ashmore Emerging
The main advantage of trading using opposite Legg Mason and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Ashmore Emerging 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.| Legg Mason vs. Hennessy Nerstone Mid | Legg Mason vs. Fpa Queens Road | Legg Mason vs. American Century Etf | Legg Mason vs. Columbia Small Cap |
| Ashmore Emerging vs. Harbor Diversified International | Ashmore Emerging vs. Fidelity Advisor Diversified | Ashmore Emerging vs. Western Asset Diversified | Ashmore Emerging vs. Lord Abbett Diversified |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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