Correlation Between Legg Mason and Hartford Moderate
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Hartford Moderate 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 Hartford Moderate 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 Hartford Moderate Allocation, you can compare the effects of market volatilities on Legg Mason and Hartford Moderate 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 Hartford Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Hartford Moderate.
Diversification Opportunities for Legg Mason and Hartford Moderate
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legg and Hartford is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Hartford Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Moderate 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 Hartford Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Moderate has no effect on the direction of Legg Mason i.e., Legg Mason and Hartford Moderate go up and down completely randomly.
Pair Corralation between Legg Mason and Hartford Moderate
Assuming the 90 days horizon Legg Mason is expected to generate 3.68 times less return on investment than Hartford Moderate. But when comparing it to its historical volatility, Legg Mason Partners is 3.94 times less risky than Hartford Moderate. It trades about 0.13 of its potential returns per unit of risk. Hartford Moderate Allocation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,257 in Hartford Moderate Allocation on September 3, 2024 and sell it today you would earn a total of 95.00 from holding Hartford Moderate Allocation or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Hartford Moderate Allocation
Performance |
| Timeline |
| Legg Mason Partners |
| Hartford Moderate |
Legg Mason and Hartford Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Hartford Moderate
The main advantage of trading using opposite Legg Mason and Hartford Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Hartford Moderate 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 Hartford Moderate will offset losses from the drop in Hartford Moderate'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 |
| Hartford Moderate vs. Massmutual Premier Diversified | Hartford Moderate vs. T Rowe Price | Hartford Moderate vs. Adams Diversified Equity | Hartford Moderate vs. Sentinel Small Pany |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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