Correlation Between Legg Mason and Blackrock High
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Blackrock High 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 Blackrock High 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 Blackrock High Yield, you can compare the effects of market volatilities on Legg Mason and Blackrock High 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 Blackrock High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Blackrock High.
Diversification Opportunities for Legg Mason and Blackrock High
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Blackrock is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Blackrock High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock High Yield 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 Blackrock High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock High Yield has no effect on the direction of Legg Mason i.e., Legg Mason and Blackrock High go up and down completely randomly.
Pair Corralation between Legg Mason and Blackrock High
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 1.16 times more return on investment than Blackrock High. However, Legg Mason is 1.16 times more volatile than Blackrock High Yield. It trades about 0.24 of its potential returns per unit of risk. Blackrock High Yield is currently generating about 0.16 per unit of risk. If you would invest 655.00 in Legg Mason Partners on September 2, 2024 and sell it today you would earn a total of 18.00 from holding Legg Mason Partners or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Blackrock High Yield
Performance |
| Timeline |
| Legg Mason Partners |
| Blackrock High Yield |
Legg Mason and Blackrock High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Blackrock High
The main advantage of trading using opposite Legg Mason and Blackrock High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Blackrock High 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 Blackrock High will offset losses from the drop in Blackrock High'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 |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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