Correlation Between Voya Global and Legg Mason

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

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

Diversification Opportunities for Voya Global and Legg Mason

0.84

Correlation Coefficient

Voya Global  Legg Mason

Very poor diversification

The 3 months correlation between Voya and Legg is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Voya Global Multi Asset 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 Voya Global 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 Voya Global Multi Asset 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 Voya Global i.e., Voya Global and Legg Mason go up and down completely randomly.

Pair Corralation between Voya Global and Legg Mason

Assuming the 90 days horizon Voya Global Multi Asset is expected to generate 1.53 times more return on investment than Legg Mason. However, Voya Global is 1.53 times more volatile than Legg Mason Global. It trades about 0.08 of its potential returns per unit of risk. Legg Mason Global is currently generating about 0.07 per unit of risk. If you would invest  960.00  in Voya Global Multi Asset on December 4, 2024 and sell it today you would earn a total of  214.00  from holding Voya Global Multi Asset or generate 22.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Voya Global Multi Asset  vs.  Legg Mason Global

Voya Global Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Global Multi Asset has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Legg Mason Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Legg Mason Global are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental 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 Voya Global and Legg Mason

The main advantage of trading using opposite Voya Global and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Global 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 Voya Global Multi Asset and Legg Mason Global 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.