Correlation Between United Guardian and Legal General
Can any of the company-specific risk be diversified away by investing in both United Guardian and Legal General 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 United Guardian and Legal General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and Legal General Group, you can compare the effects of market volatilities on United Guardian and Legal General 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 United Guardian with a short position of Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and Legal General.
Diversification Opportunities for United Guardian and Legal General
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Legal is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group and United Guardian 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 United Guardian are associated (or correlated) with Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of United Guardian i.e., United Guardian and Legal General go up and down completely randomly.
Pair Corralation between United Guardian and Legal General
Allowing for the 90-day total investment horizon United Guardian is expected to under-perform the Legal General. In addition to that, United Guardian is 3.31 times more volatile than Legal General Group. It trades about -0.33 of its total potential returns per unit of risk. Legal General Group is currently generating about -0.05 per unit of volatility. If you would invest 1,440 in Legal General Group on September 4, 2024 and sell it today you would lose (17.00) from holding Legal General Group or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Guardian vs. Legal General Group
Performance |
| Timeline |
| United Guardian |
| Legal General Group |
United Guardian and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Guardian and Legal General
The main advantage of trading using opposite United Guardian and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Psychemedics | United Guardian vs. Unity Bancorp |
| Legal General vs. United Guardian | Legal General vs. Patterson UTI Energy | Legal General vs. Ecoloclean Industrs | Legal General vs. Academy Sports Outdoors |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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