Correlation Between Legg Mason and Invesco European
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Invesco European 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 Invesco European 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 Invesco European Growth, you can compare the effects of market volatilities on Legg Mason and Invesco European 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 Invesco European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Invesco European.
Diversification Opportunities for Legg Mason and Invesco European
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legg and Invesco is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Invesco European Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco European Growth 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 Invesco European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco European Growth has no effect on the direction of Legg Mason i.e., Legg Mason and Invesco European go up and down completely randomly.
Pair Corralation between Legg Mason and Invesco European
Assuming the 90 days horizon Legg Mason is expected to generate 1.74 times less return on investment than Invesco European. In addition to that, Legg Mason is 1.37 times more volatile than Invesco European Growth. It trades about 0.02 of its total potential returns per unit of risk. Invesco European Growth is currently generating about 0.05 per unit of volatility. If you would invest 2,931 in Invesco European Growth on August 29, 2024 and sell it today you would earn a total of 609.00 from holding Invesco European Growth or generate 20.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Legg Mason Partners vs. Invesco European Growth
Performance |
| Timeline |
| Legg Mason Partners |
| Invesco European Growth |
Legg Mason and Invesco European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Invesco European
The main advantage of trading using opposite Legg Mason and Invesco European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Invesco European 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 Invesco European will offset losses from the drop in Invesco European's long position.| Legg Mason vs. Short Precious Metals | Legg Mason vs. The Gold Bullion | Legg Mason vs. First Eagle Gold | Legg Mason vs. Invesco Gold Special |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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