Correlation Between Simt Large and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Simt 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 Simt 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 Simt Large Cap and Legg Mason Partners, you can compare the effects of market volatilities on Simt 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 Simt Large with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Large and Legg Mason.
Diversification Opportunities for Simt Large and Legg Mason
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Simt and Legg is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Simt 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 Simt 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 Simt 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 Simt Large i.e., Simt Large and Legg Mason go up and down completely randomly.
Pair Corralation between Simt Large and Legg Mason
Assuming the 90 days horizon Simt Large Cap is expected to generate 1.09 times more return on investment than Legg Mason. However, Simt Large is 1.09 times more volatile than Legg Mason Partners. It trades about 0.06 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.06 per unit of risk. If you would invest 3,784 in Simt Large Cap on September 4, 2024 and sell it today you would earn a total of 1,538 from holding Simt Large Cap or generate 40.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simt Large Cap vs. Legg Mason Partners
Performance |
| Timeline |
| Simt Large Cap |
| Legg Mason Partners |
Simt Large and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Large and Legg Mason
The main advantage of trading using opposite Simt Large and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt 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.| Simt Large vs. T Rowe Price | Simt Large vs. Gamco Global Telecommunications | Simt Large vs. Bbh Intermediate Municipal | Simt Large vs. Federated Pennsylvania Municipal |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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