Correlation Between Legg Mason and Vanguard Institutional
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Vanguard Institutional 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 Vanguard Institutional 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 Vanguard Institutional Intermediate Term, you can compare the effects of market volatilities on Legg Mason and Vanguard Institutional 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 Vanguard Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Vanguard Institutional.
Diversification Opportunities for Legg Mason and Vanguard Institutional
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Vanguard is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Vanguard Institutional Interme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Institutional 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 Vanguard Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Institutional has no effect on the direction of Legg Mason i.e., Legg Mason and Vanguard Institutional go up and down completely randomly.
Pair Corralation between Legg Mason and Vanguard Institutional
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 8.08 times more return on investment than Vanguard Institutional. However, Legg Mason is 8.08 times more volatile than Vanguard Institutional Intermediate Term. It trades about 0.03 of its potential returns per unit of risk. Vanguard Institutional Intermediate Term is currently generating about 0.18 per unit of risk. If you would invest 2,673 in Legg Mason Partners on August 13, 2025 and sell it today you would earn a total of 50.00 from holding Legg Mason Partners or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Vanguard Institutional Interme
Performance |
| Timeline |
| Legg Mason Partners |
| Vanguard Institutional |
Legg Mason and Vanguard Institutional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Vanguard Institutional
The main advantage of trading using opposite Legg Mason and Vanguard Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Vanguard Institutional 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 Vanguard Institutional will offset losses from the drop in Vanguard Institutional's long position.| Legg Mason vs. The Hartford Healthcare | Legg Mason vs. Eventide Healthcare Life | Legg Mason vs. Health Care Ultrasector | Legg Mason vs. Delaware Healthcare Fund |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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