Correlation Between Legg Mason and Transportation Fund
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Transportation Fund 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 Transportation Fund 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 Transportation Fund Class, you can compare the effects of market volatilities on Legg Mason and Transportation Fund 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 Transportation Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Transportation Fund.
Diversification Opportunities for Legg Mason and Transportation Fund
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legg and Transportation is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Transportation Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportation Fund Class 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 Transportation Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportation Fund Class has no effect on the direction of Legg Mason i.e., Legg Mason and Transportation Fund go up and down completely randomly.
Pair Corralation between Legg Mason and Transportation Fund
Assuming the 90 days horizon Legg Mason is expected to generate 1.76 times less return on investment than Transportation Fund. But when comparing it to its historical volatility, Legg Mason Global is 4.39 times less risky than Transportation Fund. It trades about 0.2 of its potential returns per unit of risk. Transportation Fund Class is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,526 in Transportation Fund Class on September 15, 2024 and sell it today you would earn a total of 64.00 from holding Transportation Fund Class or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Transportation Fund Class
Performance |
| Timeline |
| Legg Mason Global |
| Transportation Fund Class |
Legg Mason and Transportation Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Transportation Fund
The main advantage of trading using opposite Legg Mason and Transportation Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Transportation Fund 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 Transportation Fund will offset losses from the drop in Transportation Fund's long position.| Legg Mason vs. Angel Oak Ultrashort | Legg Mason vs. Prudential Short Duration | Legg Mason vs. Delaware Investments Ultrashort | Legg Mason vs. Barings Active Short |
| Transportation Fund vs. Health Care Fund | Transportation Fund vs. Financial Services Fund | Transportation Fund vs. Technology Fund Investor | Transportation Fund vs. Banking Fund Investor |
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 CEOs Directory module to screen CEOs from public companies around the world.
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