Correlation Between Vela Large and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Vela Large 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 Vela Large and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vela Large Cap and Legg Mason Bw, you can compare the effects of market volatilities on Vela Large 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 Vela Large with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vela Large and Legg Mason.
Diversification Opportunities for Vela Large and Legg Mason
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vela and Legg is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vela Large Cap 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 Vela Large 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 Vela Large Cap 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 Vela Large i.e., Vela Large and Legg Mason go up and down completely randomly.
Pair Corralation between Vela Large and Legg Mason
Assuming the 90 days horizon Vela Large Cap is expected to generate 0.92 times more return on investment than Legg Mason. However, Vela Large Cap is 1.09 times less risky than Legg Mason. It trades about -0.01 of its potential returns per unit of risk. Legg Mason Bw is currently generating about -0.07 per unit of risk. If you would invest 1,807 in Vela Large Cap on September 12, 2024 and sell it today you would lose (1.00) from holding Vela Large Cap or give up 0.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vela Large Cap vs. Legg Mason Bw
Performance |
| Timeline |
| Vela Large Cap |
| Legg Mason Bw |
Vela Large and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vela Large and Legg Mason
The main advantage of trading using opposite Vela Large and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vela Large 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.| Vela Large vs. T Rowe Price | Vela Large vs. Artisan High Income | Vela Large vs. Doubleline Yield Opportunities | Vela Large vs. Versatile Bond Portfolio |
| Legg Mason vs. Edward Jones Money | Legg Mason vs. Hsbc Treasury Money | Legg Mason vs. Blackrock Exchange Portfolio | Legg Mason vs. General Money Market |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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