Correlation Between Legg Mason and Nationwide Bailard
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Nationwide Bailard 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 Nationwide Bailard 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 Nationwide Bailard Technology, you can compare the effects of market volatilities on Legg Mason and Nationwide Bailard 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 Nationwide Bailard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Nationwide Bailard.
Diversification Opportunities for Legg Mason and Nationwide Bailard
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Nationwide is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Nationwide Bailard Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Bailard 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 Nationwide Bailard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Bailard has no effect on the direction of Legg Mason i.e., Legg Mason and Nationwide Bailard go up and down completely randomly.
Pair Corralation between Legg Mason and Nationwide Bailard
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 1.46 times more return on investment than Nationwide Bailard. However, Legg Mason is 1.46 times more volatile than Nationwide Bailard Technology. It trades about 0.36 of its potential returns per unit of risk. Nationwide Bailard Technology is currently generating about 0.25 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 | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Legg Mason Partners vs. Nationwide Bailard Technology
Performance |
| Timeline |
| Legg Mason Partners |
| Nationwide Bailard |
Legg Mason and Nationwide Bailard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Nationwide Bailard
The main advantage of trading using opposite Legg Mason and Nationwide Bailard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Nationwide Bailard 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 Nationwide Bailard will offset losses from the drop in Nationwide Bailard'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 |
| Nationwide Bailard vs. Legg Mason Partners | Nationwide Bailard vs. Artisan Small Cap | Nationwide Bailard vs. Qs Small Capitalization | Nationwide Bailard vs. T Rowe Price |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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