Correlation Between Legg Mason and Hartford Growth

Can any of the company-specific risk be diversified away by investing in both Legg Mason and Hartford Growth 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 Hartford Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Legg Mason Partners and The Hartford Growth, you can compare the effects of market volatilities on Legg Mason and Hartford Growth 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 Hartford Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Hartford Growth.

Diversification Opportunities for Legg Mason and Hartford Growth

0.0

Correlation Coefficient

Legg Mason  Hartford Growth

Pay attention - limited upside

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

Pair Corralation between Legg Mason and Hartford Growth

Assuming the 90 days horizon Legg Mason Partners is expected to generate 22.62 times more return on investment than Hartford Growth. However, Legg Mason is 22.62 times more volatile than The Hartford Growth. It trades about 0.05 of its potential returns per unit of risk. The Hartford Growth is currently generating about 0.11 per unit of risk. If you would invest  384.00  in Legg Mason Partners on October 4, 2024 and sell it today you would lose (284.00) from holding Legg Mason Partners or give up 73.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Legg Mason Partners  vs.  The Hartford Growth

Legg Mason Partners

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hartford Growth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Legg Mason and Hartford Growth

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

The idea behind Legg Mason Partners and The Hartford 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.