Correlation Between Legg Mason and Blrc Sgy
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Blrc Sgy 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 Blrc Sgy 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 Blrc Sgy Mnp, you can compare the effects of market volatilities on Legg Mason and Blrc Sgy 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 Blrc Sgy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Blrc Sgy.
Diversification Opportunities for Legg Mason and Blrc Sgy
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Blrc is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Blrc Sgy Mnp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blrc Sgy Mnp 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 Blrc Sgy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blrc Sgy Mnp has no effect on the direction of Legg Mason i.e., Legg Mason and Blrc Sgy go up and down completely randomly.
Pair Corralation between Legg Mason and Blrc Sgy
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 2.38 times more return on investment than Blrc Sgy. However, Legg Mason is 2.38 times more volatile than Blrc Sgy Mnp. It trades about 0.05 of its potential returns per unit of risk. Blrc Sgy Mnp is currently generating about 0.07 per unit of risk. If you would invest 579.00 in Legg Mason Partners on September 2, 2024 and sell it today you would earn a total of 94.00 from holding Legg Mason Partners or generate 16.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Blrc Sgy Mnp
Performance |
| Timeline |
| Legg Mason Partners |
| Blrc Sgy Mnp |
Legg Mason and Blrc Sgy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Blrc Sgy
The main advantage of trading using opposite Legg Mason and Blrc Sgy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Blrc Sgy 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 Blrc Sgy will offset losses from the drop in Blrc Sgy'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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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