Correlation Between Target Retirement and Leggmason Partners
Can any of the company-specific risk be diversified away by investing in both Target Retirement and Leggmason Partners 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 Target Retirement and Leggmason Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Retirement 2040 and Leggmason Partners Institutional, you can compare the effects of market volatilities on Target Retirement and Leggmason Partners 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 Target Retirement with a short position of Leggmason Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Retirement and Leggmason Partners.
Diversification Opportunities for Target Retirement and Leggmason Partners
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Target and Leggmason is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Target Retirement 2040 and Leggmason Partners Institution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggmason Partners and Target Retirement 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 Target Retirement 2040 are associated (or correlated) with Leggmason Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggmason Partners has no effect on the direction of Target Retirement i.e., Target Retirement and Leggmason Partners go up and down completely randomly.
Pair Corralation between Target Retirement and Leggmason Partners
Assuming the 90 days horizon Target Retirement 2040 is expected to generate 1.39 times more return on investment than Leggmason Partners. However, Target Retirement is 1.39 times more volatile than Leggmason Partners Institutional. It trades about 0.1 of its potential returns per unit of risk. Leggmason Partners Institutional is currently generating about 0.03 per unit of risk. If you would invest 1,109 in Target Retirement 2040 on August 31, 2024 and sell it today you would earn a total of 275.00 from holding Target Retirement 2040 or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.49% |
| Values | Daily Returns |
Target Retirement 2040 vs. Leggmason Partners Institution
Performance |
| Timeline |
| Target Retirement 2040 |
| Leggmason Partners |
Target Retirement and Leggmason Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Retirement and Leggmason Partners
The main advantage of trading using opposite Target Retirement and Leggmason Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Retirement position performs unexpectedly, Leggmason Partners 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 Leggmason Partners will offset losses from the drop in Leggmason Partners' long position.| Target Retirement vs. Ms Global Fixed | Target Retirement vs. Multisector Bond Sma | Target Retirement vs. Calamos Dynamic Convertible | Target Retirement vs. Ab Bond Inflation |
| Leggmason Partners vs. Franklin Lifesmart Retirement | Leggmason Partners vs. Saat Moderate Strategy | Leggmason Partners vs. Target Retirement 2040 | Leggmason Partners vs. Franklin Lifesmart Retirement |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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