Correlation Between Gmo High and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Gmo High 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 Gmo High and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Legg Mason Global, you can compare the effects of market volatilities on Gmo High 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 Gmo High with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Legg Mason.
Diversification Opportunities for Gmo High and Legg Mason
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gmo and Legg is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield 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 Gmo High 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 Gmo High Yield 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 Gmo High i.e., Gmo High and Legg Mason go up and down completely randomly.
Pair Corralation between Gmo High and Legg Mason
Assuming the 90 days horizon Gmo High Yield is expected to generate 0.73 times more return on investment than Legg Mason. However, Gmo High Yield is 1.37 times less risky than Legg Mason. It trades about 0.38 of its potential returns per unit of risk. Legg Mason Global is currently generating about 0.26 per unit of risk. If you would invest 1,798 in Gmo High Yield on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Gmo High Yield or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Legg Mason Global
Performance |
| Timeline |
| Gmo High Yield |
| Legg Mason Global |
Gmo High and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Legg Mason
The main advantage of trading using opposite Gmo High and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High 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.| Gmo High vs. Pgim Jennison Technology | Gmo High vs. Biotechnology Ultrasector Profund | Gmo High vs. Fidelity Advisor Technology | Gmo High vs. Columbia Global Technology |
| Legg Mason vs. Calamos Global Equity | Legg Mason vs. Gmo Global Equity | Legg Mason vs. Qs Global Equity | Legg Mason vs. Touchstone International Equity |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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