Correlation Between Legg Mason and Ubs Pace
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Ubs Pace 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 Ubs Pace 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 Ubs Pace Global, you can compare the effects of market volatilities on Legg Mason and Ubs Pace 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 Ubs Pace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Ubs Pace.
Diversification Opportunities for Legg Mason and Ubs Pace
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Ubs is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Ubs Pace Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Pace Global 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 Ubs Pace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Pace Global has no effect on the direction of Legg Mason i.e., Legg Mason and Ubs Pace go up and down completely randomly.
Pair Corralation between Legg Mason and Ubs Pace
Assuming the 90 days trading horizon Legg Mason is expected to generate 1.55 times less return on investment than Ubs Pace. But when comparing it to its historical volatility, Legg Mason Partners is 4.4 times less risky than Ubs Pace. It trades about 0.27 of its potential returns per unit of risk. Ubs Pace Global is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 626.00 in Ubs Pace Global on September 2, 2024 and sell it today you would earn a total of 58.00 from holding Ubs Pace Global or generate 9.27% 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. Ubs Pace Global
Performance |
| Timeline |
| Legg Mason Partners |
| Ubs Pace Global |
Legg Mason and Ubs Pace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Ubs Pace
The main advantage of trading using opposite Legg Mason and Ubs Pace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Ubs Pace 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 Ubs Pace will offset losses from the drop in Ubs Pace'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 |
| Ubs Pace vs. Pace Smallmedium Value | Ubs Pace vs. Pace International Equity | Ubs Pace vs. Pace International Equity | Ubs Pace vs. Ubs Allocation Fund |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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