Correlation Between Legg Mason and Cullen International
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Cullen International 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 Cullen International 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 Cullen International High, you can compare the effects of market volatilities on Legg Mason and Cullen International 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 Cullen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Cullen International.
Diversification Opportunities for Legg Mason and Cullen International
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Cullen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Cullen International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen International High 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 Cullen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen International High has no effect on the direction of Legg Mason i.e., Legg Mason and Cullen International go up and down completely randomly.
Pair Corralation between Legg Mason and Cullen International
Assuming the 90 days horizon Legg Mason Global is expected to generate 0.36 times more return on investment than Cullen International. However, Legg Mason Global is 2.8 times less risky than Cullen International. It trades about 0.14 of its potential returns per unit of risk. Cullen International High is currently generating about -0.04 per unit of risk. If you would invest 953.00 in Legg Mason Global on September 12, 2024 and sell it today you would earn a total of 6.00 from holding Legg Mason Global or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Cullen International High
Performance |
| Timeline |
| Legg Mason Global |
| Cullen International High |
Legg Mason and Cullen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Cullen International
The main advantage of trading using opposite Legg Mason and Cullen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Cullen International 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 Cullen International will offset losses from the drop in Cullen International's long position.| Legg Mason vs. Ab Global Real | Legg Mason vs. Kinetics Global Fund | Legg Mason vs. Mirova Global Green | Legg Mason vs. Scharf Global Opportunity |
| Cullen International vs. Legg Mason Global | Cullen International vs. Alliancebernstein Global High | Cullen International vs. Ab Global Real | Cullen International vs. Ab Global Bond |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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