Correlation Between Legg Mason and Virtus High
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Virtus 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 Virtus 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 Virtus High Yield, you can compare the effects of market volatilities on Legg Mason and Virtus 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 Virtus High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Virtus High.
Diversification Opportunities for Legg Mason and Virtus High
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Virtus is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Virtus High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus 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 Virtus High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus High Yield has no effect on the direction of Legg Mason i.e., Legg Mason and Virtus High go up and down completely randomly.
Pair Corralation between Legg Mason and Virtus High
Assuming the 90 days trading horizon Legg Mason is expected to generate 1.04 times less return on investment than Virtus High. But when comparing it to its historical volatility, Legg Mason Partners is 1.17 times less risky than Virtus High. It trades about 0.27 of its potential returns per unit of risk. Virtus High Yield is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 359.00 in Virtus High Yield on September 2, 2024 and sell it today you would earn a total of 23.00 from holding Virtus High Yield or generate 6.41% 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. Virtus High Yield
Performance |
| Timeline |
| Legg Mason Partners |
| Virtus High Yield |
Legg Mason and Virtus High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Virtus High
The main advantage of trading using opposite Legg Mason and Virtus High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Virtus 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 Virtus High will offset losses from the drop in Virtus 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 |
| Virtus High vs. Ab Bond Inflation | Virtus High vs. Ab Bond Inflation | Virtus High vs. Oklahoma College Savings | Virtus High vs. Nationwide Inflation Protected Securities |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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