Correlation Between Legg Mason and International Stock
Can any of the company-specific risk be diversified away by investing in both Legg Mason and International Stock 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 International Stock 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 International Stock Fund, you can compare the effects of market volatilities on Legg Mason and International Stock 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 International Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and International Stock.
Diversification Opportunities for Legg Mason and International Stock
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and International is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and International Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Stock 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 International Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Stock has no effect on the direction of Legg Mason i.e., Legg Mason and International Stock go up and down completely randomly.
Pair Corralation between Legg Mason and International Stock
Assuming the 90 days horizon Legg Mason Global is expected to generate 0.24 times more return on investment than International Stock. However, Legg Mason Global is 4.17 times less risky than International Stock. It trades about 0.1 of its potential returns per unit of risk. International Stock Fund is currently generating about -0.05 per unit of risk. If you would invest 932.00 in Legg Mason Global on September 3, 2024 and sell it today you would earn a total of 27.00 from holding Legg Mason Global or generate 2.9% 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. International Stock Fund
Performance |
| Timeline |
| Legg Mason Global |
| International Stock |
Legg Mason and International Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and International Stock
The main advantage of trading using opposite Legg Mason and International Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, International Stock 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 International Stock will offset losses from the drop in International Stock's long position.| Legg Mason vs. Dreyfusstandish Global Fixed | Legg Mason vs. Morningstar Global Income | Legg Mason vs. Franklin Mutual Global | Legg Mason vs. Ab Global Real |
| International Stock vs. Mirova Global Green | International Stock vs. Dreyfusstandish Global Fixed | International Stock vs. Legg Mason Global | International Stock vs. Artisan Global Unconstrained |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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