Correlation Between Vanguard Strategic and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Vanguard Strategic and Legg Mason 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 Vanguard Strategic and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Strategic Small Cap and Legg Mason Bw, you can compare the effects of market volatilities on Vanguard Strategic and Legg Mason 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 Vanguard Strategic with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Strategic and Legg Mason.
Diversification Opportunities for Vanguard Strategic and Legg Mason
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Legg is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Strategic Small Cap and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Vanguard Strategic 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 Vanguard Strategic Small Cap are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Bw has no effect on the direction of Vanguard Strategic i.e., Vanguard Strategic and Legg Mason go up and down completely randomly.
Pair Corralation between Vanguard Strategic and Legg Mason
Assuming the 90 days horizon Vanguard Strategic Small Cap is expected to generate 2.51 times more return on investment than Legg Mason. However, Vanguard Strategic is 2.51 times more volatile than Legg Mason Bw. It trades about 0.18 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.05 per unit of risk. If you would invest 3,840 in Vanguard Strategic Small Cap on June 12, 2025 and sell it today you would earn a total of 469.00 from holding Vanguard Strategic Small Cap or generate 12.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Strategic Small Cap vs. Legg Mason Bw
Performance |
| Timeline |
| Vanguard Strategic |
| Legg Mason Bw |
Vanguard Strategic and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Strategic and Legg Mason
The main advantage of trading using opposite Vanguard Strategic and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Strategic position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Vanguard Strategic vs. Vanguard Explorer Value | Vanguard Strategic vs. Vanguard Strategic Equity | Vanguard Strategic vs. Vanguard Diversified Equity | Vanguard Strategic vs. Vanguard Mid Cap |
| Legg Mason vs. Ab Bond Inflation | Legg Mason vs. The National Tax Free | Legg Mason vs. Enhanced Fixed Income | Legg Mason vs. Jhvit Core Bond |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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