Correlation Between Legg Mason and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Touchstone Small 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 Touchstone Small 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 Touchstone Small Cap, you can compare the effects of market volatilities on Legg Mason and Touchstone Small 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 Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Touchstone Small.
Diversification Opportunities for Legg Mason and Touchstone Small
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Legg and Touchstone is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap 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 Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Legg Mason i.e., Legg Mason and Touchstone Small go up and down completely randomly.
Pair Corralation between Legg Mason and Touchstone Small
Assuming the 90 days trading horizon Legg Mason is expected to generate 1.14 times less return on investment than Touchstone Small. In addition to that, Legg Mason is 1.14 times more volatile than Touchstone Small Cap. It trades about 0.07 of its total potential returns per unit of risk. Touchstone Small Cap is currently generating about 0.1 per unit of volatility. If you would invest 3,283 in Touchstone Small Cap on September 2, 2024 and sell it today you would earn a total of 894.00 from holding Touchstone Small Cap or generate 27.23% 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. Touchstone Small Cap
Performance |
| Timeline |
| Legg Mason Partners |
| Touchstone Small Cap |
Legg Mason and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Touchstone Small
The main advantage of trading using opposite Legg Mason and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Touchstone Small 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 Touchstone Small will offset losses from the drop in Touchstone Small'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 |
| Touchstone Small vs. Wisdomtree Siegel Global | Touchstone Small vs. Kinetics Global Fund | Touchstone Small vs. Rbc Global Opportunities | Touchstone Small vs. Us Global Investors |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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