Correlation Between Legg Mason and Ultrashort Mid
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Ultrashort Mid 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 Legg Mason and Ultrashort Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Global and Ultrashort Mid Cap Profund, you can compare the effects of market volatilities on Legg Mason and Ultrashort Mid 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 Legg Mason with a short position of Ultrashort Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Ultrashort Mid.
Diversification Opportunities for Legg Mason and Ultrashort Mid
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legg and Ultrashort is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Ultrashort Mid Cap Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrashort Mid Cap and Legg Mason 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 Legg Mason Global are associated (or correlated) with Ultrashort Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrashort Mid Cap has no effect on the direction of Legg Mason i.e., Legg Mason and Ultrashort Mid go up and down completely randomly.
Pair Corralation between Legg Mason and Ultrashort Mid
Assuming the 90 days horizon Legg Mason Global is expected to generate 0.17 times more return on investment than Ultrashort Mid. However, Legg Mason Global is 5.76 times less risky than Ultrashort Mid. It trades about 0.23 of its potential returns per unit of risk. Ultrashort Mid Cap Profund is currently generating about -0.24 per unit of risk. If you would invest 947.00 in Legg Mason Global on February 13, 2024 and sell it today you would earn a total of 12.00 from holding Legg Mason Global or generate 1.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Legg Mason Global vs. Ultrashort Mid Cap Profund
Performance |
Timeline |
Legg Mason Global |
Ultrashort Mid Cap |
Legg Mason and Ultrashort Mid Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Legg Mason and Ultrashort Mid
The main advantage of trading using opposite Legg Mason and Ultrashort Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Ultrashort Mid 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 Ultrashort Mid will offset losses from the drop in Ultrashort Mid's long position.Legg Mason vs. Barloworld Ltd ADR | Legg Mason vs. Morningstar Unconstrained Allocation | Legg Mason vs. Via Renewables | Legg Mason vs. Jpmorgan Equity Index |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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