Correlation Between Legg Mason and Massmutual Premier
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Massmutual Premier 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 Massmutual Premier 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 Massmutual Premier Disciplined, you can compare the effects of market volatilities on Legg Mason and Massmutual Premier 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 Massmutual Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Massmutual Premier.
Diversification Opportunities for Legg Mason and Massmutual Premier
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Massmutual is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Massmutual Premier Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier 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 Massmutual Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Premier has no effect on the direction of Legg Mason i.e., Legg Mason and Massmutual Premier go up and down completely randomly.
Pair Corralation between Legg Mason and Massmutual Premier
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 1.6 times more return on investment than Massmutual Premier. However, Legg Mason is 1.6 times more volatile than Massmutual Premier Disciplined. It trades about 0.36 of its potential returns per unit of risk. Massmutual Premier Disciplined is currently generating about 0.28 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. Massmutual Premier Disciplined
Performance |
| Timeline |
| Legg Mason Partners |
| Massmutual Premier |
Legg Mason and Massmutual Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Massmutual Premier
The main advantage of trading using opposite Legg Mason and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Massmutual Premier 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 Massmutual Premier will offset losses from the drop in Massmutual Premier's 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 |
| Massmutual Premier vs. Rational Defensive Growth | Massmutual Premier vs. Small Midcap Dividend Income | Massmutual Premier vs. Legg Mason Partners | Massmutual Premier vs. Qs Growth Fund |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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