Correlation Between Legg Mason and Thrivent Moderately

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

Diversification Opportunities for Legg Mason and Thrivent Moderately

0.25

Correlation Coefficient

Legg Mason  Thrivent Moderately

Modest diversification

The 3 months correlation between Legg and Thrivent is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Thrivent Moderately Servative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Moderately 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 Thrivent Moderately. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Moderately has no effect on the direction of Legg Mason i.e., Legg Mason and Thrivent Moderately go up and down completely randomly.

Pair Corralation between Legg Mason and Thrivent Moderately

Assuming the 90 days horizon Legg Mason Global is expected to under-perform the Thrivent Moderately. But the mutual fund apears to be less risky and, when comparing its historical volatility, Legg Mason Global is 1.32 times less risky than Thrivent Moderately. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Thrivent Moderately Servative is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,316  in Thrivent Moderately Servative on September 13, 2024 and sell it today you would earn a total of  24.00  from holding Thrivent Moderately Servative or generate 1.82% return on investment over 90 days.

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

Legg Mason Global  vs.  Thrivent Moderately Servative

Legg Mason Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Legg Mason Global has generated negative risk-adjusted returns adding no value to fund investors. 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.

Thrivent Moderately

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Moderately Servative are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Thrivent Moderately 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 Thrivent Moderately

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

The idea behind Legg Mason Global and Thrivent Moderately Servative 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.