Correlation Between Legg Mason and Bmo In
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Bmo In 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 Bmo In 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 Bmo In Retirement Fund, you can compare the effects of market volatilities on Legg Mason and Bmo In 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 Bmo In. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Bmo In.
Diversification Opportunities for Legg Mason and Bmo In
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Bmo is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Bmo In Retirement Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bmo In Retirement 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 Bmo In. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bmo In Retirement has no effect on the direction of Legg Mason i.e., Legg Mason and Bmo In go up and down completely randomly.
Pair Corralation between Legg Mason and Bmo In
Assuming the 90 days horizon Legg Mason Global is expected to generate 0.27 times more return on investment than Bmo In. However, Legg Mason Global is 3.66 times less risky than Bmo In. It trades about 0.25 of its potential returns per unit of risk. Bmo In Retirement Fund is currently generating about -0.12 per unit of risk. If you would invest 949.00 in Legg Mason Global on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Legg Mason Global or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Bmo In Retirement Fund
Performance |
| Timeline |
| Legg Mason Global |
| Bmo In Retirement |
Legg Mason and Bmo In Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Bmo In
The main advantage of trading using opposite Legg Mason and Bmo In positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Bmo In 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 Bmo In will offset losses from the drop in Bmo In's long position.| Legg Mason vs. Multimedia Portfolio Multimedia | Legg Mason vs. Rbc Global Equity | Legg Mason vs. Gmo Global Equity | Legg Mason vs. Ms Global Fixed |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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