Correlation Between Industrials Ultrasector and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Industrials Ultrasector 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 Industrials Ultrasector and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrials Ultrasector Profund and Legg Mason Global, you can compare the effects of market volatilities on Industrials Ultrasector 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 Industrials Ultrasector with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrials Ultrasector and Legg Mason.
Diversification Opportunities for Industrials Ultrasector and Legg Mason
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Industrials and Legg is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Industrials Ultrasector Profun and Legg Mason Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Global and Industrials Ultrasector 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 Industrials Ultrasector Profund 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 Global has no effect on the direction of Industrials Ultrasector i.e., Industrials Ultrasector and Legg Mason go up and down completely randomly.
Pair Corralation between Industrials Ultrasector and Legg Mason
Assuming the 90 days horizon Industrials Ultrasector Profund is expected to under-perform the Legg Mason. In addition to that, Industrials Ultrasector is 1.59 times more volatile than Legg Mason Global. It trades about -0.59 of its total potential returns per unit of risk. Legg Mason Global is currently generating about -0.33 per unit of volatility. If you would invest 957.00 in Legg Mason Global on September 24, 2024 and sell it today you would lose (44.00) from holding Legg Mason Global or give up 4.6% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Industrials Ultrasector Profun vs. Legg Mason Global
Performance |
Timeline |
Industrials Ultrasector |
Legg Mason Global |
Industrials Ultrasector and Legg Mason Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Industrials Ultrasector and Legg Mason
The main advantage of trading using opposite Industrials Ultrasector and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrials Ultrasector 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.Industrials Ultrasector vs. Short Real Estate | Industrials Ultrasector vs. Short Real Estate | Industrials Ultrasector vs. Ultrashort Mid Cap Profund | Industrials Ultrasector vs. Ultrashort Mid Cap Profund |
Legg Mason vs. Franklin Mutual Beacon | Legg Mason vs. Templeton Developing Markets | Legg Mason vs. Franklin Mutual Global | Legg Mason vs. Franklin Mutual Global |
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..
Other Complementary Tools
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |