Correlation Between Legg Mason and Sei Insti
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Sei Insti 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 Sei Insti 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 Sei Insti Mgd, you can compare the effects of market volatilities on Legg Mason and Sei Insti 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 Sei Insti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Sei Insti.
Diversification Opportunities for Legg Mason and Sei Insti
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Sei is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Sei Insti Mgd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sei Insti Mgd 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 Sei Insti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sei Insti Mgd has no effect on the direction of Legg Mason i.e., Legg Mason and Sei Insti go up and down completely randomly.
Pair Corralation between Legg Mason and Sei Insti
Assuming the 90 days horizon Legg Mason is expected to generate 1.2 times less return on investment than Sei Insti. But when comparing it to its historical volatility, Legg Mason Partners is 3.05 times less risky than Sei Insti. It trades about 0.13 of its potential returns per unit of risk. Sei Insti Mgd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 912.00 in Sei Insti Mgd on September 2, 2024 and sell it today you would earn a total of 44.00 from holding Sei Insti Mgd or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Sei Insti Mgd
Performance |
| Timeline |
| Legg Mason Partners |
| Sei Insti Mgd |
Legg Mason and Sei Insti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Sei Insti
The main advantage of trading using opposite Legg Mason and Sei Insti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Sei Insti 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 Sei Insti will offset losses from the drop in Sei Insti'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 |
| Sei Insti vs. Sit Emerging Markets | Sei Insti vs. Simt Multi Asset Income | Sei Insti vs. Sit International Equity | Sei Insti vs. Simt Global Managed |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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