Correlation Between BetaShares Legg and BetaShares Managed
Can any of the company-specific risk be diversified away by investing in both BetaShares Legg and BetaShares Managed 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 BetaShares Legg and BetaShares Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Legg Mason and BetaShares Managed Risk, you can compare the effects of market volatilities on BetaShares Legg and BetaShares Managed 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 BetaShares Legg with a short position of BetaShares Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Legg and BetaShares Managed.
Diversification Opportunities for BetaShares Legg and BetaShares Managed
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BetaShares and BetaShares is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Legg Mason and BetaShares Managed Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Managed Risk and BetaShares Legg 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 BetaShares Legg Mason are associated (or correlated) with BetaShares Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Managed Risk has no effect on the direction of BetaShares Legg i.e., BetaShares Legg and BetaShares Managed go up and down completely randomly.
Pair Corralation between BetaShares Legg and BetaShares Managed
Assuming the 90 days trading horizon BetaShares Legg Mason is expected to generate 142.74 times more return on investment than BetaShares Managed. However, BetaShares Legg is 142.74 times more volatile than BetaShares Managed Risk. It trades about 0.09 of its potential returns per unit of risk. BetaShares Managed Risk is currently generating about 0.1 per unit of risk. If you would invest 799.00 in BetaShares Legg Mason on August 26, 2024 and sell it today you would earn a total of 7,930 from holding BetaShares Legg Mason or generate 992.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.01% |
| Values | Daily Returns |
BetaShares Legg Mason vs. BetaShares Managed Risk
Performance |
| Timeline |
| BetaShares Legg Mason |
| BetaShares Managed Risk |
BetaShares Legg and BetaShares Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Legg and BetaShares Managed
The main advantage of trading using opposite BetaShares Legg and BetaShares Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Legg position performs unexpectedly, BetaShares Managed 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 BetaShares Managed will offset losses from the drop in BetaShares Managed's long position.| BetaShares Legg vs. BetaShares Cloud Computing | BetaShares Legg vs. BetaShares Australian EquitiesBear | BetaShares Legg vs. BetaShares Australian Investment | BetaShares Legg vs. BetaShares Diversified 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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