Correlation Between Guggenheim Large and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Guggenheim Large and Legg Mason 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 Guggenheim Large and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Large Cap and Legg Mason Partners, you can compare the effects of market volatilities on Guggenheim Large and Legg Mason 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 Guggenheim Large with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Large and Legg Mason.
Diversification Opportunities for Guggenheim Large and Legg Mason
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Guggenheim and Legg is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Large Cap and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Guggenheim Large 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 Guggenheim Large Cap are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Partners has no effect on the direction of Guggenheim Large i.e., Guggenheim Large and Legg Mason go up and down completely randomly.
Pair Corralation between Guggenheim Large and Legg Mason
If you would invest 4,798 in Guggenheim Large Cap on August 26, 2024 and sell it today you would earn a total of 287.00 from holding Guggenheim Large Cap or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim Large Cap vs. Legg Mason Partners
Performance |
| Timeline |
| Guggenheim Large Cap |
| Legg Mason Partners |
Guggenheim Large and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Large and Legg Mason
The main advantage of trading using opposite Guggenheim Large and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Large position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.The idea behind Guggenheim Large Cap and Legg Mason Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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