Correlation Between Vanguard Windsor and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Vanguard Windsor 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 Vanguard Windsor and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Windsor Fund and Legg Mason Bw, you can compare the effects of market volatilities on Vanguard Windsor 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 Vanguard Windsor with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Windsor and Legg Mason.
Diversification Opportunities for Vanguard Windsor and Legg Mason
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VANGUARD and Legg is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Windsor Fund 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 Vanguard Windsor 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 Vanguard Windsor Fund 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 Vanguard Windsor i.e., Vanguard Windsor and Legg Mason go up and down completely randomly.
Pair Corralation between Vanguard Windsor and Legg Mason
Assuming the 90 days horizon Vanguard Windsor Fund is expected to generate 3.81 times more return on investment than Legg Mason. However, Vanguard Windsor is 3.81 times more volatile than Legg Mason Bw. It trades about 0.11 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.1 per unit of risk. If you would invest 2,210 in Vanguard Windsor Fund on September 3, 2024 and sell it today you would earn a total of 284.00 from holding Vanguard Windsor Fund or generate 12.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Windsor Fund vs. Legg Mason Bw
Performance |
| Timeline |
| Vanguard Windsor |
| Legg Mason Bw |
Vanguard Windsor and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Windsor and Legg Mason
The main advantage of trading using opposite Vanguard Windsor and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Windsor 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.| Vanguard Windsor vs. Vanguard Explorer Fund | Vanguard Windsor vs. Vanguard Primecap Fund | Vanguard Windsor vs. Vanguard Wellington Fund | Vanguard Windsor vs. Vanguard Windsor Ii |
| Legg Mason vs. Dodge Cox Stock | Legg Mason vs. Qs Large Cap | Legg Mason vs. Vanguard Windsor Fund | Legg Mason vs. Touchstone Large Cap |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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