Correlation Between Legg Mason and Ab Impact
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Ab Impact 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 Ab Impact 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 Ab Impact Municipal, you can compare the effects of market volatilities on Legg Mason and Ab Impact 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 Ab Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Ab Impact.
Diversification Opportunities for Legg Mason and Ab Impact
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legg and ABIMX is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Ab Impact Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Impact Municipal 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 Ab Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Impact Municipal has no effect on the direction of Legg Mason i.e., Legg Mason and Ab Impact go up and down completely randomly.
Pair Corralation between Legg Mason and Ab Impact
Assuming the 90 days horizon Legg Mason is expected to generate 1.05 times less return on investment than Ab Impact. In addition to that, Legg Mason is 3.89 times more volatile than Ab Impact Municipal. It trades about 0.02 of its total potential returns per unit of risk. Ab Impact Municipal is currently generating about 0.08 per unit of volatility. If you would invest 886.00 in Ab Impact Municipal on September 4, 2024 and sell it today you would earn a total of 115.00 from holding Ab Impact Municipal or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Legg Mason Partners vs. Ab Impact Municipal
Performance |
| Timeline |
| Legg Mason Partners |
| Ab Impact Municipal |
Legg Mason and Ab Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Ab Impact
The main advantage of trading using opposite Legg Mason and Ab Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Ab Impact 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 Ab Impact will offset losses from the drop in Ab Impact'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 |
| Ab Impact vs. Ab Global E | Ab Impact vs. Ab Global E | Ab Impact vs. Ab Global E | Ab Impact vs. Ab Minnesota Portfolio |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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