Correlation Between Legg Mason and Oppenheimer Global
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Oppenheimer Global 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 Oppenheimer Global 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 Oppenheimer Global Strtgc, you can compare the effects of market volatilities on Legg Mason and Oppenheimer Global 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 Oppenheimer Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Oppenheimer Global.
Diversification Opportunities for Legg Mason and Oppenheimer Global
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Legg and Oppenheimer is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Oppenheimer Global Strtgc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Global Strtgc 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 Oppenheimer Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Global Strtgc has no effect on the direction of Legg Mason i.e., Legg Mason and Oppenheimer Global go up and down completely randomly.
Pair Corralation between Legg Mason and Oppenheimer Global
Assuming the 90 days horizon Legg Mason is expected to generate 1.11 times less return on investment than Oppenheimer Global. In addition to that, Legg Mason is 2.91 times more volatile than Oppenheimer Global Strtgc. It trades about 0.02 of its total potential returns per unit of risk. Oppenheimer Global Strtgc is currently generating about 0.06 per unit of volatility. If you would invest 271.00 in Oppenheimer Global Strtgc on August 30, 2024 and sell it today you would earn a total of 37.00 from holding Oppenheimer Global Strtgc or generate 13.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Legg Mason Partners vs. Oppenheimer Global Strtgc
Performance |
| Timeline |
| Legg Mason Partners |
| Oppenheimer Global Strtgc |
Legg Mason and Oppenheimer Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Oppenheimer Global
The main advantage of trading using opposite Legg Mason and Oppenheimer Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Oppenheimer Global 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 Oppenheimer Global will offset losses from the drop in Oppenheimer Global'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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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