Correlation Between Transamerica Emerging and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging 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 Transamerica Emerging and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Emerging Markets and Legg Mason Partners, you can compare the effects of market volatilities on Transamerica Emerging 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 Transamerica Emerging with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Legg Mason.
Diversification Opportunities for Transamerica Emerging and Legg Mason
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transamerica and Legg is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets 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 Transamerica Emerging 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 Transamerica Emerging Markets 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 Transamerica Emerging i.e., Transamerica Emerging and Legg Mason go up and down completely randomly.
Pair Corralation between Transamerica Emerging and Legg Mason
Assuming the 90 days horizon Transamerica Emerging Markets is expected to under-perform the Legg Mason. But the mutual fund apears to be less risky and, when comparing its historical volatility, Transamerica Emerging Markets is 2.15 times less risky than Legg Mason. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Legg Mason Partners is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,590 in Legg Mason Partners on September 3, 2024 and sell it today you would earn a total of 293.00 from holding Legg Mason Partners or generate 11.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. Legg Mason Partners
Performance |
| Timeline |
| Transamerica Emerging |
| Legg Mason Partners |
Transamerica Emerging and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and Legg Mason
The main advantage of trading using opposite Transamerica Emerging and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging 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.| Transamerica Emerging vs. Guggenheim High Yield | Transamerica Emerging vs. Lord Abbett High | Transamerica Emerging vs. Msift High Yield | Transamerica Emerging vs. Ppm High Yield |
| Legg Mason vs. Hennessy Nerstone Mid | Legg Mason vs. Fpa Queens Road | Legg Mason vs. American Century Etf | Legg Mason vs. Columbia Small Cap |
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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