Correlation Between Victory Strategic and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Victory Strategic 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 Victory Strategic and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory Strategic Allocation and Legg Mason Bw, you can compare the effects of market volatilities on Victory Strategic 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 Victory Strategic with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Strategic and Legg Mason.
Diversification Opportunities for Victory Strategic and Legg Mason
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Victory and Legg is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Victory Strategic Allocation 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 Victory Strategic 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 Victory Strategic Allocation 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 Victory Strategic i.e., Victory Strategic and Legg Mason go up and down completely randomly.
Pair Corralation between Victory Strategic and Legg Mason
Assuming the 90 days horizon Victory Strategic is expected to generate 2.61 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Victory Strategic Allocation is 2.49 times less risky than Legg Mason. It trades about 0.3 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 2,228 in Legg Mason Bw on September 4, 2024 and sell it today you would earn a total of 146.00 from holding Legg Mason Bw or generate 6.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Victory Strategic Allocation vs. Legg Mason Bw
Performance |
| Timeline |
| Victory Strategic |
| Legg Mason Bw |
Victory Strategic and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory Strategic and Legg Mason
The main advantage of trading using opposite Victory Strategic and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Strategic 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.| Victory Strategic vs. Victory Rs International | Victory Strategic vs. Victory High Yield | Victory Strategic vs. Victory Sycamore Established | Victory Strategic vs. Victory Integrity Discovery |
| Legg Mason vs. Inflation Protected Bond Fund | Legg Mason vs. Western Asset Inflation | Legg Mason vs. Fidelity Sai Inflationfocused | Legg Mason vs. Ab Bond Inflation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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