Correlation Between Pace Large and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Pace Large 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 Pace Large and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Large Growth and Legg Mason Global, you can compare the effects of market volatilities on Pace Large 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 Pace Large with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Large and Legg Mason.
Diversification Opportunities for Pace Large and Legg Mason
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pace and Legg is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Growth 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 Pace Large 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 Pace Large Growth 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 Pace Large i.e., Pace Large and Legg Mason go up and down completely randomly.
Pair Corralation between Pace Large and Legg Mason
Assuming the 90 days horizon Pace Large Growth is expected to under-perform the Legg Mason. In addition to that, Pace Large is 5.32 times more volatile than Legg Mason Global. It trades about -0.07 of its total potential returns per unit of risk. Legg Mason Global is currently generating about 0.14 per unit of volatility. If you would invest 916.00 in Legg Mason Global on December 18, 2024 and sell it today you would earn a total of 17.00 from holding Legg Mason Global or generate 1.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Pace Large Growth vs. Legg Mason Global
Performance |
Timeline |
Pace Large Growth |
Legg Mason Global |
Pace Large and Legg Mason Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pace Large and Legg Mason
The main advantage of trading using opposite Pace Large and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Large 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.Pace Large vs. Stone Ridge Diversified | Pace Large vs. Western Asset Diversified | Pace Large vs. Harbor Diversified International | Pace Large vs. Jhancock Diversified Macro |
Legg Mason vs. Investec Global Franchise | Legg Mason vs. Victory Global Natural | Legg Mason vs. Nuveen Global Infrastructure | Legg Mason vs. Barings Global Floating |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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