Correlation Between Gamco Global and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Gamco 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 Gamco 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 Gamco Global Opportunity and Legg Mason Global, you can compare the effects of market volatilities on Gamco 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 Gamco Global with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and Legg Mason.
Diversification Opportunities for Gamco Global and Legg Mason
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gamco and Legg is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Opportunity 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 Gamco 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 Gamco Global Opportunity 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 Gamco Global i.e., Gamco Global and Legg Mason go up and down completely randomly.
Pair Corralation between Gamco Global and Legg Mason
Assuming the 90 days horizon Gamco Global Opportunity is expected to generate 3.6 times more return on investment than Legg Mason. However, Gamco Global is 3.6 times more volatile than Legg Mason Global. It trades about 0.16 of its potential returns per unit of risk. Legg Mason Global is currently generating about 0.28 per unit of risk. If you would invest 1,016 in Gamco Global Opportunity on November 3, 2024 and sell it today you would earn a total of 24.00 from holding Gamco Global Opportunity or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Gamco Global Opportunity vs. Legg Mason Global
Performance |
| Timeline |
| Gamco Global Opportunity |
| Legg Mason Global |
Gamco Global and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamco Global and Legg Mason
The main advantage of trading using opposite Gamco Global and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco 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.| Gamco Global vs. Blackrock Financial Institutions | Gamco Global vs. Vanguard Financials Index | Gamco Global vs. Financial Industries Fund | Gamco Global vs. Icon Financial Fund |
| Legg Mason vs. Lord Abbett Diversified | Legg Mason vs. Lord Abbett Diversified | Legg Mason vs. Fulcrum Diversified Absolute | Legg Mason vs. Wells Fargo Diversified |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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