Correlation Between Legg Mason and Strategic Asset
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Strategic Asset 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 Strategic Asset 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 Strategic Asset Management, you can compare the effects of market volatilities on Legg Mason and Strategic Asset 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 Strategic Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Strategic Asset.
Diversification Opportunities for Legg Mason and Strategic Asset
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Strategic is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Strategic Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Asset Mana 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 Strategic Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Asset Mana has no effect on the direction of Legg Mason i.e., Legg Mason and Strategic Asset go up and down completely randomly.
Pair Corralation between Legg Mason and Strategic Asset
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 2.05 times more return on investment than Strategic Asset. However, Legg Mason is 2.05 times more volatile than Strategic Asset Management. It trades about 0.1 of its potential returns per unit of risk. Strategic Asset Management is currently generating about 0.12 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 417.00 from holding Legg Mason Partners or generate 16.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Strategic Asset Management
Performance |
| Timeline |
| Legg Mason Partners |
| Strategic Asset Mana |
Legg Mason and Strategic Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Strategic Asset
The main advantage of trading using opposite Legg Mason and Strategic Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Strategic Asset 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 Strategic Asset will offset losses from the drop in Strategic Asset'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 |
| Strategic Asset vs. Prudential Financial Services | Strategic Asset vs. Royce Global Financial | Strategic Asset vs. Blackrock Financial Institutions | Strategic Asset vs. Transamerica Financial Life |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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