Correlation Between Legg Mason and Multi-index 2045

Can any of the company-specific risk be diversified away by investing in both Legg Mason and Multi-index 2045 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 Multi-index 2045 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 Multi Index 2045 Lifetime, you can compare the effects of market volatilities on Legg Mason and Multi-index 2045 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 Multi-index 2045. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Multi-index 2045.

Diversification Opportunities for Legg Mason and Multi-index 2045

0.84

Correlation Coefficient

Legg Mason  Multi-index 2045

Very poor diversification

The 3 months correlation between Legg and Multi-index is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Multi Index 2045 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2045 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 Multi-index 2045. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2045 has no effect on the direction of Legg Mason i.e., Legg Mason and Multi-index 2045 go up and down completely randomly.

Pair Corralation between Legg Mason and Multi-index 2045

Assuming the 90 days trading horizon Legg Mason is expected to generate 2.09 times less return on investment than Multi-index 2045. But when comparing it to its historical volatility, Legg Mason Partners is 3.42 times less risky than Multi-index 2045. It trades about 0.23 of its potential returns per unit of risk. Multi Index 2045 Lifetime is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,410  in Multi Index 2045 Lifetime on August 31, 2024 and sell it today you would earn a total of  76.00  from holding Multi Index 2045 Lifetime or generate 5.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Legg Mason Partners  vs.  Multi Index 2045 Lifetime

Legg Mason Partners

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Legg Mason Partners are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. 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.

Multi Index 2045

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2045 Lifetime are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multi-index 2045 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Legg Mason and Multi-index 2045

The main advantage of trading using opposite Legg Mason and Multi-index 2045 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Multi-index 2045 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 Multi-index 2045 will offset losses from the drop in Multi-index 2045's long position.

The idea behind Legg Mason Partners and Multi Index 2045 Lifetime 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.