Correlation Between Legg Mason and Highland Small-cap
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Highland Small-cap 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 Highland Small-cap 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 Highland Small Cap Equity, you can compare the effects of market volatilities on Legg Mason and Highland Small-cap 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 Highland Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Highland Small-cap.
Diversification Opportunities for Legg Mason and Highland Small-cap
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legg and Highland is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Highland Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Small Cap 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 Highland Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Small Cap has no effect on the direction of Legg Mason i.e., Legg Mason and Highland Small-cap go up and down completely randomly.
Pair Corralation between Legg Mason and Highland Small-cap
If you would invest 312.00 in Highland Small Cap Equity on August 25, 2024 and sell it today you would earn a total of 3.00 from holding Highland Small Cap Equity or generate 0.96% 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. Highland Small Cap Equity
Performance |
| Timeline |
| Legg Mason Partners |
| Highland Small Cap |
Legg Mason and Highland Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Highland Small-cap
The main advantage of trading using opposite Legg Mason and Highland Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Highland Small-cap 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 Highland Small-cap will offset losses from the drop in Highland Small-cap'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 |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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