Correlation Between Legg Mason and Global Real
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Global Real 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 Global Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Global and Global Real Estate, you can compare the effects of market volatilities on Legg Mason and Global Real 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 Global Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Global Real.
Diversification Opportunities for Legg Mason and Global Real
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Global is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Global Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Real Estate 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 Global are associated (or correlated) with Global Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Real Estate has no effect on the direction of Legg Mason i.e., Legg Mason and Global Real go up and down completely randomly.
Pair Corralation between Legg Mason and Global Real
Assuming the 90 days horizon Legg Mason Global is expected to generate 0.59 times more return on investment than Global Real. However, Legg Mason Global is 1.7 times less risky than Global Real. It trades about -0.27 of its potential returns per unit of risk. Global Real Estate is currently generating about -0.34 per unit of risk. If you would invest 952.00 in Legg Mason Global on September 23, 2024 and sell it today you would lose (36.00) from holding Legg Mason Global or give up 3.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Global Real Estate
Performance |
| Timeline |
| Legg Mason Global |
| Global Real Estate |
Legg Mason and Global Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Global Real
The main advantage of trading using opposite Legg Mason and Global Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Global Real 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 Global Real will offset losses from the drop in Global Real's long position.| Legg Mason vs. Franklin Mutual Beacon | Legg Mason vs. Templeton Developing Markets | Legg Mason vs. Franklin Mutual Global | Legg Mason vs. Franklin Mutual Global |
| Global Real vs. Mid Cap Value | Global Real vs. Equity Growth Fund | Global Real vs. Income Growth Fund | Global Real vs. Diversified Bond Fund |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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