Correlation Between Legg Mason and Midcap Fund
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Midcap Fund 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 Midcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Bw and Midcap Fund Class, you can compare the effects of market volatilities on Legg Mason and Midcap Fund 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 Midcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Midcap Fund.
Diversification Opportunities for Legg Mason and Midcap Fund
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Midcap is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Midcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund Class 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 Bw are associated (or correlated) with Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund Class has no effect on the direction of Legg Mason i.e., Legg Mason and Midcap Fund go up and down completely randomly.
Pair Corralation between Legg Mason and Midcap Fund
Assuming the 90 days horizon Legg Mason Bw is expected to generate 0.85 times more return on investment than Midcap Fund. However, Legg Mason Bw is 1.18 times less risky than Midcap Fund. It trades about 0.21 of its potential returns per unit of risk. Midcap Fund Class is currently generating about 0.11 per unit of risk. If you would invest 2,043 in Legg Mason Bw on June 13, 2025 and sell it today you would earn a total of 168.00 from holding Legg Mason Bw or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Midcap Fund Class
Performance |
| Timeline |
| Legg Mason Bw |
| Midcap Fund Class |
Legg Mason and Midcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Midcap Fund
The main advantage of trading using opposite Legg Mason and Midcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Midcap Fund 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 Midcap Fund will offset losses from the drop in Midcap Fund's long position.| Legg Mason vs. Adams Natural Resources | Legg Mason vs. Fidelity Advisor Energy | Legg Mason vs. Pimco Energy Tactical | Legg Mason vs. Thrivent Natural Resources |
| Midcap Fund vs. Siit Small Cap | Midcap Fund vs. Auer Growth Fund | Midcap Fund vs. Qs Moderate Growth | Midcap Fund vs. Tfa Alphagen Growth |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |