Correlation Between Legg Mason and Us Government
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Us Government 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 Us Government 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 Us Government Securities, you can compare the effects of market volatilities on Legg Mason and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Us Government.
Diversification Opportunities for Legg Mason and Us Government
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and UGSDX is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Legg Mason i.e., Legg Mason and Us Government go up and down completely randomly.
Pair Corralation between Legg Mason and Us Government
Assuming the 90 days horizon Legg Mason Global is expected to generate 1.82 times more return on investment than Us Government. However, Legg Mason is 1.82 times more volatile than Us Government Securities. It trades about 0.15 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.22 per unit of risk. If you would invest 950.00 in Legg Mason Global on September 17, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Us Government Securities
Performance |
| Timeline |
| Legg Mason Global |
| Us Government Securities |
Legg Mason and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Us Government
The main advantage of trading using opposite Legg Mason and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government'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 |
| Us Government vs. World Precious Minerals | Us Government vs. Near Term Tax Free | Us Government vs. Gold And Precious | Us Government vs. Us Global Investors |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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