Correlation Between Federated Global and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Federated Global 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 Federated Global and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Global Allocation and Legg Mason Global, you can compare the effects of market volatilities on Federated Global 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 Federated Global with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Legg Mason.
Diversification Opportunities for Federated Global and Legg Mason
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Legg is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Legg Mason Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Global and Federated Global 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 Federated Global Allocation 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 Global has no effect on the direction of Federated Global i.e., Federated Global and Legg Mason go up and down completely randomly.
Pair Corralation between Federated Global and Legg Mason
Assuming the 90 days horizon Federated Global Allocation is expected to generate 2.61 times more return on investment than Legg Mason. However, Federated Global is 2.61 times more volatile than Legg Mason Global. It trades about 0.3 of its potential returns per unit of risk. Legg Mason Global is currently generating about 0.27 per unit of risk. If you would invest 1,938 in Federated Global Allocation on November 2, 2024 and sell it today you would earn a total of 61.00 from holding Federated Global Allocation or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Global Allocation vs. Legg Mason Global
Performance |
| Timeline |
| Federated Global All |
| Legg Mason Global |
Federated Global and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and Legg Mason
The main advantage of trading using opposite Federated Global and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global 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.| Federated Global vs. Federated Max Cap Index | Federated Global vs. Federated Kaufmann Fund | Federated Global vs. Federated Strategic Income | Federated Global vs. Federated Bond Fund |
| Legg Mason vs. Gmo High Yield | Legg Mason vs. Old Westbury Fixed | Legg Mason vs. Morningstar Defensive Bond | Legg Mason vs. Ab Bond Inflation |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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