Correlation Between Legg Mason and Prudential High
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Prudential High 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 Prudential High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Partners and Prudential High Yield, you can compare the effects of market volatilities on Legg Mason and Prudential High 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 Prudential High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Prudential High.
Diversification Opportunities for Legg Mason and Prudential High
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Prudential is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Prudential High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential High Yield 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 Partners are associated (or correlated) with Prudential High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential High Yield has no effect on the direction of Legg Mason i.e., Legg Mason and Prudential High go up and down completely randomly.
Pair Corralation between Legg Mason and Prudential High
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 1.49 times more return on investment than Prudential High. However, Legg Mason is 1.49 times more volatile than Prudential High Yield. It trades about 0.26 of its potential returns per unit of risk. Prudential High Yield is currently generating about 0.3 per unit of risk. If you would invest 1,172 in Legg Mason Partners on May 29, 2025 and sell it today you would earn a total of 58.00 from holding Legg Mason Partners or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Prudential High Yield
Performance |
| Timeline |
| Legg Mason Partners |
| Prudential High Yield |
Legg Mason and Prudential High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Prudential High
The main advantage of trading using opposite Legg Mason and Prudential High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Prudential High 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 Prudential High will offset losses from the drop in Prudential High's long position.| Legg Mason vs. Fidelity Real Estate | Legg Mason vs. Cohen Steers Real | Legg Mason vs. Nuveen Real Estate | Legg Mason vs. Rreef Property Trust |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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