Correlation Between Global Diversified and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Global Diversified and Legg Mason 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 Global Diversified and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Diversified Income and Legg Mason Global, you can compare the effects of market volatilities on Global Diversified and Legg Mason 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 Global Diversified with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Diversified and Legg Mason.
Diversification Opportunities for Global Diversified and Legg Mason
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Legg is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Global Diversified Income and Legg Mason Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Global and Global Diversified 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 Global Diversified Income are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Global has no effect on the direction of Global Diversified i.e., Global Diversified and Legg Mason go up and down completely randomly.
Pair Corralation between Global Diversified and Legg Mason
Assuming the 90 days horizon Global Diversified Income is expected to generate 0.64 times more return on investment than Legg Mason. However, Global Diversified Income is 1.56 times less risky than Legg Mason. It trades about 0.09 of its potential returns per unit of risk. Legg Mason Global is currently generating about 0.05 per unit of risk. If you would invest 1,070 in Global Diversified Income on November 1, 2024 and sell it today you would earn a total of 120.00 from holding Global Diversified Income or generate 11.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Diversified Income vs. Legg Mason Global
Performance |
| Timeline |
| Global Diversified Income |
| Legg Mason Global |
Global Diversified and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Diversified and Legg Mason
The main advantage of trading using opposite Global Diversified and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Diversified position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Global Diversified vs. Pimco Moditiesplus Strategy | Global Diversified vs. Jpmorgan Emerging Markets | Global Diversified vs. Dws Emerging Markets | Global Diversified vs. Barings Emerging Markets |
| Legg Mason vs. Tekla Healthcare Investors | Legg Mason vs. Baron Health Care | Legg Mason vs. The Hartford Healthcare | Legg Mason vs. Health Care Fund |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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