Correlation Between Leggmason Partners and American Beacon

Can any of the company-specific risk be diversified away by investing in both Leggmason Partners and American Beacon 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 American Beacon 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 American Beacon Stephens, you can compare the effects of market volatilities on Leggmason Partners and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and American Beacon.

Diversification Opportunities for Leggmason Partners and American Beacon

0.0

Correlation Coefficient

Leggmason Partners  American Beacon

Pay attention - limited upside

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

Pair Corralation between Leggmason Partners and American Beacon

If you would invest  100.00  in Leggmason Partners Institutional on December 2, 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	100.0%
Values	Daily Returns

Leggmason Partners Institution  vs.  American Beacon Stephens

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.

American Beacon Stephens

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Beacon Stephens has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Leggmason Partners and American Beacon

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

The idea behind Leggmason Partners Institutional and American Beacon Stephens 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.