Correlation Between Aqr Small and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Aqr Small 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 Aqr Small and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Small Cap and Legg Mason Bw, you can compare the effects of market volatilities on Aqr Small 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 Aqr Small with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Small and Legg Mason.
Diversification Opportunities for Aqr Small and Legg Mason
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aqr and Legg is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Small Cap and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Aqr Small 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 Aqr Small Cap 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 Bw has no effect on the direction of Aqr Small i.e., Aqr Small and Legg Mason go up and down completely randomly.
Pair Corralation between Aqr Small and Legg Mason
Assuming the 90 days horizon Aqr Small Cap is expected to under-perform the Legg Mason. In addition to that, Aqr Small is 3.39 times more volatile than Legg Mason Bw. It trades about -0.07 of its total potential returns per unit of risk. Legg Mason Bw is currently generating about 0.18 per unit of volatility. If you would invest 820.00 in Legg Mason Bw on December 27, 2024 and sell it today you would earn a total of 34.00 from holding Legg Mason Bw or generate 4.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aqr Small Cap vs. Legg Mason Bw
Performance |
Timeline |
Aqr Small Cap |
Legg Mason Bw |
Aqr Small and Legg Mason Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aqr Small and Legg Mason
The main advantage of trading using opposite Aqr Small and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Small 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.Aqr Small vs. Davis Financial Fund | Aqr Small vs. Hewitt Money Market | Aqr Small vs. Schwab Government Money | Aqr Small vs. Ab Government Exchange |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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