Correlation Between Legg Mason and Cohen Steers
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Cohen Steers 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 Cohen Steers 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 Cohen Steers Preferred, you can compare the effects of market volatilities on Legg Mason and Cohen Steers 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 Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Cohen Steers.
Diversification Opportunities for Legg Mason and Cohen Steers
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Cohen is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Cohen Steers Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Preferred 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 Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Preferred has no effect on the direction of Legg Mason i.e., Legg Mason and Cohen Steers go up and down completely randomly.
Pair Corralation between Legg Mason and Cohen Steers
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 1.27 times more return on investment than Cohen Steers. However, Legg Mason is 1.27 times more volatile than Cohen Steers Preferred. It trades about 0.31 of its potential returns per unit of risk. Cohen Steers Preferred is currently generating about 0.09 per unit of risk. If you would invest 665.00 in Legg Mason Partners on September 1, 2024 and sell it today you would earn a total of 8.00 from holding Legg Mason Partners or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Legg Mason Partners vs. Cohen Steers Preferred
Performance |
| Timeline |
| Legg Mason Partners |
| Cohen Steers Preferred |
Legg Mason and Cohen Steers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Cohen Steers
The main advantage of trading using opposite Legg Mason and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' 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 |
| Cohen Steers vs. Legg Mason Partners | Cohen Steers vs. Dunham High Yield | Cohen Steers vs. Blackrock High Yield | Cohen Steers vs. Mesirow Financial High |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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