Correlation Between Legg Mason and Jhancock Multi-index

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

By analyzing existing cross correlation between Legg Mason Global and Jhancock Multi Index 2065, you can compare the effects of market volatilities on Legg Mason and Jhancock Multi-index 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 Jhancock Multi-index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Jhancock Multi-index.

Diversification Opportunities for Legg Mason and Jhancock Multi-index

-0.27

Correlation Coefficient

Legg Mason  Jhancock Multi-index

Very good diversification

The 3 months correlation between Legg and Jhancock is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Jhancock Multi Index 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Multi Index 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 Global are associated (or correlated) with Jhancock Multi-index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Multi Index has no effect on the direction of Legg Mason i.e., Legg Mason and Jhancock Multi-index go up and down completely randomly.

Pair Corralation between Legg Mason and Jhancock Multi-index

Assuming the 90 days horizon Legg Mason is expected to generate 14.74 times less return on investment than Jhancock Multi-index. But when comparing it to its historical volatility, Legg Mason Global is 2.69 times less risky than Jhancock Multi-index. It trades about 0.03 of its potential returns per unit of risk. Jhancock Multi Index 2065 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,418  in Jhancock Multi Index 2065 on September 3, 2024 and sell it today you would earn a total of  92.00  from holding Jhancock Multi Index 2065 or generate 6.49% return on investment over 90 days.

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

Legg Mason Global  vs.  Jhancock Multi Index 2065

Legg Mason Global

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Legg Mason Global are ranked lower than 2 (%) 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.

Jhancock Multi Index

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jhancock Multi Index 2065 are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Jhancock Multi-index may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Legg Mason and Jhancock Multi-index

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

The idea behind Legg Mason Global and Jhancock Multi Index 2065 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 Commodity Directory module to find actively traded commodities issued by global exchanges.