Correlation Between Pimco Real and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Pimco Real 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 Pimco Real and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Real Return and Legg Mason Partners, you can compare the effects of market volatilities on Pimco Real 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 Pimco Real with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Real and Legg Mason.
Diversification Opportunities for Pimco Real and Legg Mason
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pimco and Legg is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Real Return and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Pimco Real 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 Pimco Real Return 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 Partners has no effect on the direction of Pimco Real i.e., Pimco Real and Legg Mason go up and down completely randomly.
Pair Corralation between Pimco Real and Legg Mason
Assuming the 90 days horizon Pimco Real is expected to generate 9.83 times less return on investment than Legg Mason. In addition to that, Pimco Real is 2.09 times more volatile than Legg Mason Partners. It trades about 0.0 of its total potential returns per unit of risk. Legg Mason Partners is currently generating about 0.04 per unit of volatility. If you would invest 94.00 in Legg Mason Partners on September 1, 2024 and sell it today you would earn a total of 6.00 from holding Legg Mason Partners or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Real Return vs. Legg Mason Partners
Performance |
| Timeline |
| Pimco Real Return |
| Legg Mason Partners |
Pimco Real and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Real and Legg Mason
The main advantage of trading using opposite Pimco Real and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Real 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.| Pimco Real vs. Blackrock Moderate Prepared | Pimco Real vs. Multimanager Lifestyle Moderate | Pimco Real vs. Target Retirement 2040 | Pimco Real vs. Tiaa Cref Lifestyle Moderate |
| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |