Correlation Between Malaga Financial and Legg Mason

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

By analyzing existing cross correlation between Malaga Financial and Legg Mason Partners, you can compare the effects of market volatilities on Malaga Financial 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 Malaga Financial with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malaga Financial and Legg Mason.

Diversification Opportunities for Malaga Financial and Legg Mason

-0.15

Correlation Coefficient

Malaga Financial  Legg Mason

Good diversification

The 3 months correlation between Malaga and Legg is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Malaga Financial and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Malaga Financial 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 Malaga Financial 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 Partners has no effect on the direction of Malaga Financial i.e., Malaga Financial and Legg Mason go up and down completely randomly.

Pair Corralation between Malaga Financial and Legg Mason

Given the investment horizon of 90 days Malaga Financial is expected to generate 6.61 times more return on investment than Legg Mason. However, Malaga Financial is 6.61 times more volatile than Legg Mason Partners. It trades about 0.03 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.08 per unit of risk. If you would invest  1,910  in Malaga Financial on October 22, 2024 and sell it today you would earn a total of  195.00  from holding Malaga Financial or generate 10.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.49%
Values	Daily Returns

Malaga Financial  vs.  Legg Mason Partners

Malaga Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malaga Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Malaga Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 primary indicators, Legg Mason is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Malaga Financial and Legg Mason

The main advantage of trading using opposite Malaga Financial and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malaga Financial 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.

The idea behind Malaga Financial and Legg Mason Partners 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.