Correlation Between Legg Mason and Aqr Global
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Aqr Global 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 Aqr Global 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 Aqr Global Equity, you can compare the effects of market volatilities on Legg Mason and Aqr Global 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 Aqr Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Aqr Global.
Diversification Opportunities for Legg Mason and Aqr Global
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Aqr is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Aqr Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Global Equity 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 Aqr Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Global Equity has no effect on the direction of Legg Mason i.e., Legg Mason and Aqr Global go up and down completely randomly.
Pair Corralation between Legg Mason and Aqr Global
Assuming the 90 days trading horizon Legg Mason is expected to generate 3.78 times less return on investment than Aqr Global. But when comparing it to its historical volatility, Legg Mason Partners is 3.57 times less risky than Aqr Global. It trades about 0.22 of its potential returns per unit of risk. Aqr Global Equity is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,143 in Aqr Global Equity on August 31, 2024 and sell it today you would earn a total of 39.00 from holding Aqr Global Equity or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Aqr Global Equity
Performance |
| Timeline |
| Legg Mason Partners |
| Aqr Global Equity |
Legg Mason and Aqr Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Aqr Global
The main advantage of trading using opposite Legg Mason and Aqr Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Aqr Global 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 Aqr Global will offset losses from the drop in Aqr Global's long position.| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
| Aqr Global vs. Versatile Bond Portfolio | Aqr Global vs. Inflation Protected Bond Fund | Aqr Global vs. Bbh Intermediate Municipal | Aqr Global vs. Legg Mason Partners |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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