Correlation Between LG Russell and Legal General
Can any of the company-specific risk be diversified away by investing in both LG Russell and Legal General 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 LG Russell and Legal General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Russell 2000 and Legal General UCITS, you can compare the effects of market volatilities on LG Russell and Legal General 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 LG Russell with a short position of Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Russell and Legal General.
Diversification Opportunities for LG Russell and Legal General
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between RTWO and Legal is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding LG Russell 2000 and Legal General UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General UCITS and LG Russell 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 LG Russell 2000 are associated (or correlated) with Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General UCITS has no effect on the direction of LG Russell i.e., LG Russell and Legal General go up and down completely randomly.
Pair Corralation between LG Russell and Legal General
Assuming the 90 days trading horizon LG Russell 2000 is expected to generate 1.48 times more return on investment than Legal General. However, LG Russell is 1.48 times more volatile than Legal General UCITS. It trades about 0.27 of its potential returns per unit of risk. Legal General UCITS is currently generating about 0.14 per unit of risk. If you would invest 9,853 in LG Russell 2000 on August 31, 2024 and sell it today you would earn a total of 1,215 from holding LG Russell 2000 or generate 12.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
LG Russell 2000 vs. Legal General UCITS
Performance |
| Timeline |
| LG Russell 2000 |
| Legal General UCITS |
LG Russell and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Russell and Legal General
The main advantage of trading using opposite LG Russell and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Russell position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| LG Russell vs. iShares Core MSCI | LG Russell vs. Vanguard FTSE All World | LG Russell vs. BlackRock ESG Multi Asset | LG Russell vs. Pershing Square Holdings |
| Legal General vs. Legal General UCITS | Legal General vs. LG Russell 2000 | Legal General vs. VanEck Multi Asset Growth | Legal General vs. iShares III Public |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |