Correlation Between Legg Mason and Voya Bond
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Voya Bond 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 Voya Bond 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 Voya Bond Index, you can compare the effects of market volatilities on Legg Mason and Voya Bond 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 Voya Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Voya Bond.
Diversification Opportunities for Legg Mason and Voya Bond
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Voya is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Voya Bond Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Bond Index 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 Voya Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Bond Index has no effect on the direction of Legg Mason i.e., Legg Mason and Voya Bond go up and down completely randomly.
Pair Corralation between Legg Mason and Voya Bond
Assuming the 90 days horizon Legg Mason Global is expected to generate 0.9 times more return on investment than Voya Bond. However, Legg Mason Global is 1.11 times less risky than Voya Bond. It trades about 0.05 of its potential returns per unit of risk. Voya Bond Index is currently generating about 0.03 per unit of risk. If you would invest 850.00 in Legg Mason Global on November 5, 2024 and sell it today you would earn a total of 76.00 from holding Legg Mason Global or generate 8.94% 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. Voya Bond Index
Performance |
| Timeline |
| Legg Mason Global |
| Voya Bond Index |
Legg Mason and Voya Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Voya Bond
The main advantage of trading using opposite Legg Mason and Voya Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Voya Bond 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 Voya Bond will offset losses from the drop in Voya Bond's long position.The idea behind Legg Mason Global and Voya Bond Index pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Voya Bond vs. Ab Global Bond | Voya Bond vs. Transamerica Asset Allocation | Voya Bond vs. Morningstar Global Income | Voya Bond vs. L Abbett Growth |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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