Correlation Between Legg Mason and Oppenheimer Discovery
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Oppenheimer Discovery 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 Oppenheimer Discovery 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 Oppenheimer Discovery Mid, you can compare the effects of market volatilities on Legg Mason and Oppenheimer Discovery 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 Oppenheimer Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Oppenheimer Discovery.
Diversification Opportunities for Legg Mason and Oppenheimer Discovery
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legg and Oppenheimer is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Oppenheimer Discovery Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Discovery Mid 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 Oppenheimer Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Discovery Mid has no effect on the direction of Legg Mason i.e., Legg Mason and Oppenheimer Discovery go up and down completely randomly.
Pair Corralation between Legg Mason and Oppenheimer Discovery
Assuming the 90 days horizon Legg Mason Global is expected to under-perform the Oppenheimer Discovery. But the mutual fund apears to be less risky and, when comparing its historical volatility, Legg Mason Global is 5.32 times less risky than Oppenheimer Discovery. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Oppenheimer Discovery Mid is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,712 in Oppenheimer Discovery Mid on September 17, 2024 and sell it today you would earn a total of 228.00 from holding Oppenheimer Discovery Mid or generate 8.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Legg Mason Global vs. Oppenheimer Discovery Mid
Performance |
Timeline |
Legg Mason Global |
Oppenheimer Discovery Mid |
Legg Mason and Oppenheimer Discovery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Legg Mason and Oppenheimer Discovery
The main advantage of trading using opposite Legg Mason and Oppenheimer Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Oppenheimer Discovery 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 Oppenheimer Discovery will offset losses from the drop in Oppenheimer Discovery's long position.Legg Mason vs. Franklin Mutual Beacon | Legg Mason vs. Templeton Developing Markets | Legg Mason vs. Franklin Mutual Global | Legg Mason vs. Franklin Mutual Global |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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