Correlation Between Legg Mason and American Beacon
Can any of the company-specific risk be diversified away by investing in both Legg Mason and American Beacon 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 American Beacon 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 American Beacon Ssi, you can compare the effects of market volatilities on Legg Mason and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and American Beacon.
Diversification Opportunities for Legg Mason and American Beacon
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and American is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and American Beacon Ssi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ssi 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Ssi has no effect on the direction of Legg Mason i.e., Legg Mason and American Beacon go up and down completely randomly.
Pair Corralation between Legg Mason and American Beacon
If you would invest 992.00 in American Beacon Ssi on August 29, 2024 and sell it today you would earn a total of 9.00 from holding American Beacon Ssi or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. American Beacon Ssi
Performance |
| Timeline |
| Legg Mason Partners |
| American Beacon Ssi |
Legg Mason and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and American Beacon
The main advantage of trading using opposite Legg Mason and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon'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 |
| American Beacon vs. Commonwealth Global Fund | American Beacon vs. Ab Global Risk | American Beacon vs. Dreyfusstandish Global Fixed | American Beacon vs. Ms Global Fixed |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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