Correlation Between Legg Mason and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Xtrackers MSCI 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 Xtrackers MSCI 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 Xtrackers MSCI EAFE, you can compare the effects of market volatilities on Legg Mason and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Xtrackers MSCI.
Diversification Opportunities for Legg Mason and Xtrackers MSCI
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Xtrackers is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Low and Xtrackers MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI EAFE 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI EAFE has no effect on the direction of Legg Mason i.e., Legg Mason and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Legg Mason and Xtrackers MSCI
Given the investment horizon of 90 days Legg Mason Low is expected to generate 0.57 times more return on investment than Xtrackers MSCI. However, Legg Mason Low is 1.75 times less risky than Xtrackers MSCI. It trades about 0.47 of its potential returns per unit of risk. Xtrackers MSCI EAFE is currently generating about -0.08 per unit of risk. If you would invest 3,927 in Legg Mason Low on September 3, 2024 and sell it today you would earn a total of 198.00 from holding Legg Mason Low or generate 5.04% 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. Xtrackers MSCI EAFE
Performance |
| Timeline |
| Legg Mason Low |
| Xtrackers MSCI EAFE |
Legg Mason and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Xtrackers MSCI
The main advantage of trading using opposite Legg Mason and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI'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 |
| Xtrackers MSCI vs. iShares MSCI EAFE | Xtrackers MSCI vs. Vanguard International High | Xtrackers MSCI vs. iShares International Select | Xtrackers MSCI vs. Hartford Multifactor Developed |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |