Correlation Between Spire Global and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Spire Global and Legg Mason 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 Spire Global and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Global and Legg Mason Partners, you can compare the effects of market volatilities on Spire Global and Legg Mason 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 Spire Global with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Legg Mason.
Diversification Opportunities for Spire Global and Legg Mason
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spire and Legg is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Spire Global 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 Spire Global are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Partners has no effect on the direction of Spire Global i.e., Spire Global and Legg Mason go up and down completely randomly.
Pair Corralation between Spire Global and Legg Mason
Given the investment horizon of 90 days Spire Global is expected to generate 12.9 times more return on investment than Legg Mason. However, Spire Global is 12.9 times more volatile than Legg Mason Partners. It trades about 0.24 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.14 per unit of risk. If you would invest 1,150 in Spire Global on September 12, 2024 and sell it today you would earn a total of 266.00 from holding Spire Global or generate 23.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spire Global vs. Legg Mason Partners
Performance |
| Timeline |
| Spire Global |
| Legg Mason Partners |
Spire Global and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire Global and Legg Mason
The main advantage of trading using opposite Spire Global and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Spire Global vs. Lichen China Limited | Spire Global vs. Unifirst | Spire Global vs. First Advantage Corp | Spire Global vs. Performant Financial |
| Legg Mason vs. Transamerica Intermediate Muni | Legg Mason vs. T Rowe Price | Legg Mason vs. T Rowe Price | Legg Mason vs. Bbh Intermediate Municipal |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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