Correlation Between Legg Mason and Amg Gwk
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Amg Gwk 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 Amg Gwk 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 Amg Gwk E, you can compare the effects of market volatilities on Legg Mason and Amg Gwk 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 Amg Gwk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Amg Gwk.
Diversification Opportunities for Legg Mason and Amg Gwk
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legg and Amg is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Amg Gwk E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Gwk E 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 Amg Gwk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Gwk E has no effect on the direction of Legg Mason i.e., Legg Mason and Amg Gwk go up and down completely randomly.
Pair Corralation between Legg Mason and Amg Gwk
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 2.85 times more return on investment than Amg Gwk. However, Legg Mason is 2.85 times more volatile than Amg Gwk E. It trades about 0.04 of its potential returns per unit of risk. Amg Gwk E is currently generating about 0.03 per unit of risk. If you would invest 2,412 in Legg Mason Partners on September 2, 2024 and sell it today you would earn a total of 471.00 from holding Legg Mason Partners or generate 19.53% 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. Amg Gwk E
Performance |
| Timeline |
| Legg Mason Partners |
| Amg Gwk E |
Legg Mason and Amg Gwk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Amg Gwk
The main advantage of trading using opposite Legg Mason and Amg Gwk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Amg Gwk 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 Amg Gwk will offset losses from the drop in Amg Gwk's long position.| Legg Mason vs. Shelton Emerging Markets | Legg Mason vs. Locorr Market Trend | Legg Mason vs. Rbc Emerging Markets | Legg Mason vs. Western Asset Diversified |
| Amg Gwk vs. Amg Southernsun Equity | Amg Gwk vs. Amg Southernsun Equity | Amg Gwk vs. Amg Fq Long Short | Amg Gwk vs. Amg Southernsun Small |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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