Correlation Between Legg Mason and Pimco Total
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Pimco Total 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 Pimco Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Bw and Pimco Total Return, you can compare the effects of market volatilities on Legg Mason and Pimco Total 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 Pimco Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Pimco Total.
Diversification Opportunities for Legg Mason and Pimco Total
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legg and Pimco is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Pimco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Total Return 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 Bw are associated (or correlated) with Pimco Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Total Return has no effect on the direction of Legg Mason i.e., Legg Mason and Pimco Total go up and down completely randomly.
Pair Corralation between Legg Mason and Pimco Total
Assuming the 90 days horizon Legg Mason Bw is expected to under-perform the Pimco Total. In addition to that, Legg Mason is 1.84 times more volatile than Pimco Total Return. It trades about -0.08 of its total potential returns per unit of risk. Pimco Total Return is currently generating about 0.13 per unit of volatility. If you would invest 859.00 in Pimco Total Return on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Pimco Total Return or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Pimco Total Return
Performance |
| Timeline |
| Legg Mason Bw |
| Pimco Total Return |
Legg Mason and Pimco Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Pimco Total
The main advantage of trading using opposite Legg Mason and Pimco Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Pimco Total 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 Pimco Total will offset losses from the drop in Pimco Total's long position.| Legg Mason vs. Simt Multi Asset Inflation | Legg Mason vs. Loomis Sayles Inflation | Legg Mason vs. Guggenheim Managed Futures | Legg Mason vs. Ab Bond Inflation |
| Pimco Total vs. Columbia Global Technology | Pimco Total vs. Science Technology Fund | Pimco Total vs. Fidelity Advisor Technology | Pimco Total vs. Towpath Technology |
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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