Correlation Between Legg Mason and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Sterling Capital 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 Sterling Capital 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 Sterling Capital Stratton, you can compare the effects of market volatilities on Legg Mason and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Sterling Capital.
Diversification Opportunities for Legg Mason and Sterling Capital
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Legg and Sterling is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Stratton has no effect on the direction of Legg Mason i.e., Legg Mason and Sterling Capital go up and down completely randomly.
Pair Corralation between Legg Mason and Sterling Capital
If you would invest 6,786 in Sterling Capital Stratton on August 30, 2024 and sell it today you would earn a total of 336.00 from holding Sterling Capital Stratton or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Legg Mason Partners vs. Sterling Capital Stratton
Performance |
| Timeline |
| Legg Mason Partners |
| Sterling Capital Stratton |
Legg Mason and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Sterling Capital
The main advantage of trading using opposite Legg Mason and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital'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 |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital South |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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