Correlation Between Legg Mason and Lgm Risk
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Lgm Risk 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 Lgm Risk 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 Lgm Risk Managed, you can compare the effects of market volatilities on Legg Mason and Lgm Risk 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 Lgm Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Lgm Risk.
Diversification Opportunities for Legg Mason and Lgm Risk
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legg and Lgm is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Lgm Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lgm Risk Managed 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 Lgm Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lgm Risk Managed has no effect on the direction of Legg Mason i.e., Legg Mason and Lgm Risk go up and down completely randomly.
Pair Corralation between Legg Mason and Lgm Risk
Assuming the 90 days horizon Legg Mason Global is expected to under-perform the Lgm Risk. But the mutual fund apears to be less risky and, when comparing its historical volatility, Legg Mason Global is 1.41 times less risky than Lgm Risk. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Lgm Risk Managed is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,115 in Lgm Risk Managed on August 28, 2024 and sell it today you would earn a total of 34.00 from holding Lgm Risk Managed or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Legg Mason Global vs. Lgm Risk Managed
Performance |
| Timeline |
| Legg Mason Global |
| Lgm Risk Managed |
Legg Mason and Lgm Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Lgm Risk
The main advantage of trading using opposite Legg Mason and Lgm Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Lgm Risk 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 Lgm Risk will offset losses from the drop in Lgm Risk'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 |
| Lgm Risk vs. Shelton Emerging Markets | Lgm Risk vs. Rbc Emerging Markets | Lgm Risk vs. Artisan Emerging Markets | Lgm Risk vs. Barings Emerging Markets |
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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