Correlation Between Legg Mason and Madison Moderate
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Madison 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 Madison 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 Madison Moderate Allocation, you can compare the effects of market volatilities on Legg Mason and Madison 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 Madison Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Madison Moderate.
Diversification Opportunities for Legg Mason and Madison Moderate
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legg and Madison is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Madison Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Moderate All 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 Madison Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Moderate All has no effect on the direction of Legg Mason i.e., Legg Mason and Madison Moderate go up and down completely randomly.
Pair Corralation between Legg Mason and Madison Moderate
Assuming the 90 days horizon Legg Mason is expected to generate 3.01 times less return on investment than Madison Moderate. But when comparing it to its historical volatility, Legg Mason Partners is 3.22 times less risky than Madison Moderate. It trades about 0.13 of its potential returns per unit of risk. Madison Moderate Allocation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,004 in Madison Moderate Allocation on September 2, 2024 and sell it today you would earn a total of 129.00 from holding Madison Moderate Allocation or generate 12.85% 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. Madison Moderate Allocation
Performance |
| Timeline |
| Legg Mason Partners |
| Madison Moderate All |
Legg Mason and Madison Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Madison Moderate
The main advantage of trading using opposite Legg Mason and Madison Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Madison 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 Madison Moderate will offset losses from the drop in Madison 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 |
| Madison Moderate vs. Chestnut Street Exchange | Madison Moderate vs. Meeder Funds | Madison Moderate vs. Legg Mason Partners | Madison Moderate vs. Dreyfus Institutional Reserves |
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 Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |