Correlation Between Legg Mason and Columbia Real
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Columbia Real 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 Columbia Real 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 Columbia Real Estate, you can compare the effects of market volatilities on Legg Mason and Columbia Real 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 Columbia Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Columbia Real.
Diversification Opportunities for Legg Mason and Columbia Real
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Columbia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Columbia Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Real Estate 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 Columbia Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Real Estate has no effect on the direction of Legg Mason i.e., Legg Mason and Columbia Real go up and down completely randomly.
Pair Corralation between Legg Mason and Columbia Real
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 0.16 times more return on investment than Columbia Real. However, Legg Mason Partners is 6.09 times less risky than Columbia Real. It trades about 0.14 of its potential returns per unit of risk. Columbia Real Estate is currently generating about 0.02 per unit of risk. If you would invest 629.00 in Legg Mason Partners on December 29, 2024 and sell it today you would earn a total of 10.00 from holding Legg Mason Partners or generate 1.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.39% |
Values | Daily Returns |
Legg Mason Partners vs. Columbia Real Estate
Performance |
Timeline |
Legg Mason Partners |
Columbia Real Estate |
Legg Mason and Columbia Real Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Legg Mason and Columbia Real
The main advantage of trading using opposite Legg Mason and Columbia Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Columbia Real 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 Columbia Real will offset losses from the drop in Columbia Real's long position.Legg Mason vs. John Hancock Ii | Legg Mason vs. Inverse Mid Cap Strategy | Legg Mason vs. Allianzgi International Small Cap | Legg Mason vs. T Rowe Price |
Columbia Real vs. Artisan High Income | Columbia Real vs. Metropolitan West High | Columbia Real vs. Vanguard Target Retirement | Columbia Real vs. Ab Global Risk |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation |