Correlation Between Leggmason Partners and Transamerica Capital

Can any of the company-specific risk be diversified away by investing in both Leggmason Partners and Transamerica Capital 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 Leggmason Partners and Transamerica Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Leggmason Partners Institutional and Transamerica Capital Growth, you can compare the effects of market volatilities on Leggmason Partners and Transamerica Capital 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 Leggmason Partners with a short position of Transamerica Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and Transamerica Capital.

Diversification Opportunities for Leggmason Partners and Transamerica Capital

0.0

Correlation Coefficient

Leggmason Partners  Transamerica Capital

Pay attention - limited upside

The 3 months correlation between Leggmason and Transamerica is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Leggmason Partners Institution and Transamerica Capital Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Capital and Leggmason Partners 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 Leggmason Partners Institutional are associated (or correlated) with Transamerica Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Capital has no effect on the direction of Leggmason Partners i.e., Leggmason Partners and Transamerica Capital go up and down completely randomly.

Pair Corralation between Leggmason Partners and Transamerica Capital

If you would invest  100.00  in Leggmason Partners Institutional on December 24, 2024 and sell it today you would earn a total of  0.00  from holding Leggmason Partners Institutional or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Leggmason Partners Institution  vs.  Transamerica Capital Growth

Leggmason Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leggmason Partners Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Leggmason Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Transamerica Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transamerica Capital Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Transamerica Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Leggmason Partners and Transamerica Capital

The main advantage of trading using opposite Leggmason Partners and Transamerica Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggmason Partners position performs unexpectedly, Transamerica Capital 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 Transamerica Capital will offset losses from the drop in Transamerica Capital's long position.

The idea behind Leggmason Partners Institutional and Transamerica Capital Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.