Correlation Between Legg Mason and Global X
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Low and Global X Funds, you can compare the effects of market volatilities on Legg Mason and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Global X.
Diversification Opportunities for Legg Mason and Global X
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Global is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Low and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Low are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Legg Mason i.e., Legg Mason and Global X go up and down completely randomly.
Pair Corralation between Legg Mason and Global X
Given the investment horizon of 90 days Legg Mason Low is expected to generate 0.6 times more return on investment than Global X. However, Legg Mason Low is 1.66 times less risky than Global X. It trades about 0.2 of its potential returns per unit of risk. Global X Funds is currently generating about 0.02 per unit of risk. If you would invest 3,518 in Legg Mason Low on September 5, 2024 and sell it today you would earn a total of 546.00 from holding Legg Mason Low or generate 15.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Low vs. Global X Funds
Performance |
| Timeline |
| Legg Mason Low |
| Global X Funds |
Legg Mason and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Global X
The main advantage of trading using opposite Legg Mason and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Legg Mason vs. Franklin International Low | Legg Mason vs. Invesco SP SmallCap | Legg Mason vs. FlexShares Quality Dividend | Legg Mason vs. Invesco SP MidCap |
| Global X vs. SCOR PK | Global X vs. HUMANA INC | Global X vs. Aquagold International | Global X vs. Barloworld Ltd ADR |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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