Correlation Between Legg Mason and Matson Money
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Matson Money 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 Matson Money 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 Matson Money Fixed, you can compare the effects of market volatilities on Legg Mason and Matson Money 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 Matson Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Matson Money.
Diversification Opportunities for Legg Mason and Matson Money
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Legg and MATSON is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Matson Money Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Money Fixed 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 Matson Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Money Fixed has no effect on the direction of Legg Mason i.e., Legg Mason and Matson Money go up and down completely randomly.
Pair Corralation between Legg Mason and Matson Money
If you would invest 2,454 in Matson Money Fixed on August 28, 2024 and sell it today you would earn a total of 8.00 from holding Matson Money Fixed or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Matson Money Fixed
Performance |
| Timeline |
| Legg Mason Partners |
| Matson Money Fixed |
Legg Mason and Matson Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Matson Money
The main advantage of trading using opposite Legg Mason and Matson Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Matson Money 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 Matson Money will offset losses from the drop in Matson Money'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 |
| Matson Money vs. Pace High Yield | Matson Money vs. Pace High Yield | Matson Money vs. Pimco High Yield | Matson Money vs. Blackrock High Yield |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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