Correlation Between Jhancock Global and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Jhancock Global 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 Jhancock Global and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jhancock Global Equity and Legg Mason Global, you can compare the effects of market volatilities on Jhancock Global 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 Jhancock Global with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jhancock Global and Legg Mason.
Diversification Opportunities for Jhancock Global and Legg Mason
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jhancock and Legg is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Jhancock Global Equity 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 Jhancock Global 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 Jhancock Global Equity 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 Jhancock Global i.e., Jhancock Global and Legg Mason go up and down completely randomly.
Pair Corralation between Jhancock Global and Legg Mason
Assuming the 90 days horizon Jhancock Global Equity is expected to generate about the same return on investment as Legg Mason Global. However, Jhancock Global is 3.7 times more volatile than Legg Mason Global. It trades about 0.04 of its potential returns per unit of risk. Legg Mason Global is currently producing about 0.16 per unit of risk. If you would invest 914.00 in Legg Mason Global on December 29, 2024 and sell it today you would earn a total of 18.00 from holding Legg Mason Global or generate 1.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Jhancock Global Equity vs. Legg Mason Global
Performance |
Timeline |
Jhancock Global Equity |
Legg Mason Global |
Jhancock Global and Legg Mason Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jhancock Global and Legg Mason
The main advantage of trading using opposite Jhancock Global and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jhancock Global 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.Jhancock Global vs. Transamerica Emerging Markets | Jhancock Global vs. Prudential Emerging Markets | Jhancock Global vs. Rbc Emerging Markets | Jhancock Global vs. Franklin Emerging Market |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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