Correlation Between Sarofim Equity and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Sarofim Equity 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 Sarofim Equity and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarofim Equity and Legg Mason Bw, you can compare the effects of market volatilities on Sarofim Equity 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 Sarofim Equity with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarofim Equity and Legg Mason.
Diversification Opportunities for Sarofim Equity and Legg Mason
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sarofim and Legg is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sarofim Equity and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Sarofim Equity 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 Sarofim Equity 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 Bw has no effect on the direction of Sarofim Equity i.e., Sarofim Equity and Legg Mason go up and down completely randomly.
Pair Corralation between Sarofim Equity and Legg Mason
Assuming the 90 days horizon Sarofim Equity is expected to generate 6.58 times more return on investment than Legg Mason. However, Sarofim Equity is 6.58 times more volatile than Legg Mason Bw. It trades about 0.33 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.6 per unit of risk. If you would invest 1,647 in Sarofim Equity on September 4, 2024 and sell it today you would earn a total of 77.00 from holding Sarofim Equity or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sarofim Equity vs. Legg Mason Bw
Performance |
| Timeline |
| Sarofim Equity |
| Legg Mason Bw |
Sarofim Equity and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarofim Equity and Legg Mason
The main advantage of trading using opposite Sarofim Equity and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarofim Equity 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.| Sarofim Equity vs. Global Technology Portfolio | Sarofim Equity vs. Fidelity Advisor Technology | Sarofim Equity vs. Allianzgi Technology Fund | Sarofim Equity vs. Hennessy Technology Fund |
| Legg Mason vs. Clearbridge Aggressive Growth | Legg Mason vs. Clearbridge Small Cap | Legg Mason vs. Qs International Equity | Legg Mason vs. Clearbridge Appreciation Fund |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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