Correlation Between Voya Target and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Voya Target 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 Voya Target and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Target Retirement and Legg Mason Bw, you can compare the effects of market volatilities on Voya Target 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 Voya Target with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Target and Legg Mason.
Diversification Opportunities for Voya Target and Legg Mason
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Voya and Legg is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Voya Target Retirement 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 Voya Target 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 Voya Target Retirement 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 Voya Target i.e., Voya Target and Legg Mason go up and down completely randomly.
Pair Corralation between Voya Target and Legg Mason
Assuming the 90 days horizon Voya Target is expected to generate 1.32 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Voya Target Retirement is 1.09 times less risky than Legg Mason. It trades about 0.11 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,846 in Legg Mason Bw on November 3, 2024 and sell it today you would earn a total of 259.00 from holding Legg Mason Bw or generate 14.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Target Retirement vs. Legg Mason Bw
Performance |
| Timeline |
| Voya Target Retirement |
| Legg Mason Bw |
Voya Target and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Target and Legg Mason
The main advantage of trading using opposite Voya Target and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Target 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.| Voya Target vs. Franklin Adjustable Government | Voya Target vs. Intermediate Bond Fund | Voya Target vs. Gmo Emerging Ntry | Voya Target vs. Dreyfusstandish Global Fixed |
| Legg Mason vs. Vanguard Energy Index | Legg Mason vs. Pimco Energy Tactical | Legg Mason vs. Invesco Energy Fund | Legg Mason vs. Alpsalerian Energy Infrastructure |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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